Photos of long queues at the weekend and reports that broke transaction and price records one after another have touched a nerve in Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, the city’s de facto central banker.

One who usually chooses his words carefully, Chan said the high turnout rate was reminiscent of the property market’s 1997 peak and saw conditions that eventually led to a market crash and a six-year slump. There were risks that the property bubble might burst in the city, he said.

Nicholas Brooke,chairman of Professional Property Services Group agreed.

“There are similarities to 1997 in terms of price rises, the queuing, the long upward cycle and the strong general buying momentum in the market,” Brooke said.

Watch: Why is Hong Kong housing so expensive?

Still, for every prophecy of doom, there is a believer in the upside.

“Home prices have always been high,” said Alice Shun, one of the hundreds of buyers in the queue for Ocean Pride. “I don’t think it can really ever go down from here. We have to buy property to live in them. So it doesn’t really affect our decision to buy.”

Two decades ago, the city’s hottest property was the Villa Esplanada complex in Tsing Yi, a joint project of Chinese Resources, Sun Hung Kai Properties and Cheung Kong Property. Hundreds of buyers thronged the project’s Causeway Bay sales office, going around the block.

A few months after the project’s launch, the 1997 Asian financial crisis arrived on Hong Kong’s shores, causing a 70 per cent collapse in home prices and driving an estimated 100,000 home owners into negative equity. It would take six years for the market to crawl out of the slump.

The bubble was there, said Cusson Leung, managing director at JPMorgan Chase’s Asia-Pacific equity research unit, who remembered the 1997 crash.

“We see the cloud hanging out there, but we are not sure when it will rain,” Leung said.

To be sure, Hong Kong’s economy is at a different level today, compared with what it was in 1997, which could shield the city from a crash even if a price correction is unavoidable.

“[The city’s gross domestic product growth] appears to have steadied even if it is not overexciting and interest rates remain relatively benign, with tolerance to absorb up to two, and even more, 25-basis-point increases before affordability becomes a real issue,” Brooke said.

Most importantly, loans have got much cheaper after 20 years even if property prices are at their peak. The city’s average mortgage rate is 2.15 per cent, a fraction of the 11.25 per cent in September 1997, according to JLL.

“The loan-to-value ratio is now 40 or 50 per cent, according to the new measures restricted by the HKMA,” said Joseph Tsang, managing director of JLL Hong Kong. “In 1997, buyers could borrow more than 80 per cent [of the value of their property].”

That means that even if home prices were to plunge 50 per cent now, no one in the city will actually find themselves in negative equity.

Hong Kong’s property market suffered another setback in 2003 when it had barely recovered from the 1997 crash, weighed down by the outbreak of severe acute respiratory syndrome that deterred visitors, curtailed travels and sapped economic activity.

“At the time, more than 80 per cent of buyers were flippers who traded a number of homes. Today, 80 per cent of buyers are end-users,” Tsang said.

On the back of the improved GDP, lower interest rates and a better banking system, an enlarged net of buyers and growing wealth in the city over the past 20 years had helped sustain the current property boom, said Nicole Wong, regional head of property research at CLSA.

The profile of Hong Kong resident buyers has also changed during this time.

“There are many Hong Kong resident permit holders coming from the mainland and they have strong balance sheets,” she said.

About 9,000 mainland students enrol as undergraduates in Hong Kong universities each year, and thousands enter through the Scheme for Mainland Talents and Professionals. They become qualified buyers once they have lived in Hong Kong for seven years.

By Wong’s estimates, this group of “Hong Kong residents” can create demand for up to 30 per cent or 6,000 units of the city’s average new home supply every year.

“The net of buyers has been expanding, giving a cushion buffer to the housing market,” Wong said.

As more than 50 per cent of Hong Kong’s home owners have paid off their mortgages, it is their wealth and not incomes that will fund further purchases.

“That explains why young homebuyers also come with their parents when they sign the contract,” Wong said, adding that parents provided the financial backup to the new generation of buyers.

According to JPMorgan, the loan-deposit ratio. a measurement of banks’ liquidity by dividing total loans by total deposits, fell from 109 per cent in July 1997 to 76 per cent in April 2017.

Other supportive factors are the ample liquidity and limited supply to meet the demand.

Still, is the city’s property market invulnerable?

Yes and no, as analysts say these sound fundamentals are based on one assumption.

“This all assumes no dramatic external regional or international event, which affects confidence to which Hong Kong has always been vulnerable,” Brooke said.

The article has been amended to clarify that Hong Kong’s mortgage rate hit a high of 11.25 per cent in September 1997 in the 17th paragraph, compared with 9.6 per cent in June the same year stated in the table