In contrast to the rest of Asia, South Korea's real estate sector is in the midst of a crisis with residential property in Greater Seoul area being marked 10 percent below recent levels and down twice that figure in the other regions of the country.

Combined with the slowdown in demand for housing, bank credit has also dried up affecting some high-profile projects. Experts say, this has led to real fears that the downturn in real estate would bog down the South Korean economy as a whole.

The reason for sagging demand is the high household-debt in the region of about 140 percent of disposable income and compounded, according to some analysts, by the changing demographics - a generation more inclined to be bearish in their investments decisions as compared to its predecessors.

Analysts and economists predict that South Korean consumption may slip and consequently slow the country's overall growth, especially as export gains begin to taper off in the coming months. The economy is expected to grow about six percent this year, but is not forecast to grow more than four percent in 2011.

The South Koran government had earlier cancelled a number of projects faced with sluggish demand and is reportedly considering a bailout for the real estate industry. It is even adding one mega project - a $20 billion investment in a new city, Sejong - to where more than half of the South Korean government's ministries are slated to move during the decade.

The government is also seeking to boost demand for the residential market by announcing (second time in the year) that it would buy unsold new apartments. This followed closely on the heels of a decision by regulators to suspend the debt-to-income restrictions that banks must apply to mortgage borrowers for six months.

However, neither of these steps is having a significant effect on the state of the real estate market. As a consequence of the steep fall in domestic demand, most of the construction majors are looking to foreign shores in search of revenues - in cases of some companies as much as 50 percent of the total is predicted to come from abroad.

South Korea