S. Korea is facing an “empty city” challenge. Government data shows overall home vacancy rose to 6.5 percent last month, with some regions even jumping to 10 percent. But the main reason behind the weak demand in S. Korea’s real estate market is a huge drop in population growth.

The country’s population growth for 2017 plummeted by over 40 percent from 2016. Meanwhile, most of the residents living in the country’s capital Seoul are over 60 years old. When they pass away, their homes will be left vacant up to three years.

“In the long run, an aging population and low birth rate will hit the country's consumption, bringing down home prices and stagnate the national economy,” said Syeon-Win Yeon, professor of Konkuk University.

In addition to the population challenge, the country’s home construction industry has continued to expand. The number of houses soared 60 percent quarter-on-quarter, the highest in the past 15 years, while the number of empty apartment’s in Seoul rose to 94,000 last month.

“There are already so many empty apartments. What’s worrisome is that construction of a lot of new homes will be completed in the next two years,” said a real estate agent.

S. Korea’s real estate market, together with closely-connected industries, account for half the country's annual GDP. However, the massive cut in the workforce of key industries such as automaking and steel is hitting the house market surrounding those industry bases. Analysts warn that the persistent rise in the home vacancy rate will pose a massive threat to the country's macro economy if the government doesn’t intervene.