A failed ballistic missile launch sparked panic in a usually quiet South Korean city after it crashed into the ground and triggered a huge fire, officials said Wednesday.

Security allies Seoul and Washington have staged multiple joint drills, including bombing runs and missile launches, in response to North Korea firing an intermediate-range ballistic missile (IRBM) over Japan on Tuesday.

The South Korean military fired a Hyunmoo-2 short-range ballistic missile late Tuesday but it malfunctioned and crashed shortly after launch.

The missile's propellant caught fire but its warhead did not detonate, a South Korean military official told the Yonhap news agency.

Viral social media footage -- which AFP could not verify -- showed an orange ball of flames at an area users said was near an air force base close to Gangneung on the country's east coast.

"Many frantic residents called the city hall," an official at the Gangneung City Hall told AFP.

"At first we didn't know what was going on because we didn't receive any notice from the military about such training," she added, speaking on condition of anonymity.

South and North Korea remain technically at war after the 1950-53 Korean War ended in an armistice rather than a peace treaty.

Armed conflicts between the two neighbours are rare, but the missile crash made some residents believe that war had broken out.

"I thought there was a war but it turns out to be a military training," said one user on Twitter.

"What took them so long to confirm? If there is a war, we will probably find out about it the next day," another user tweeted.

South Korea's Joint Chiefs of Staff said there were no reported casualties and that it was looking into the cause of the crash.