23 January 2019
If the MERS scare persists, home prices could come down in Hong Kong, as happened in the wake of the SARS crisis in 2003, netizens have pointed out. Photo: HKEJ
If the MERS scare persists, home prices could come down in Hong Kong, as happened in the wake of the SARS crisis in 2003, netizens have pointed out. Photo: HKEJ

Amid MERS scare, some familiar thoughts in HK

It is revealing that some of the first reactions in Hong Kong to reports of a suspected MERS case in the city have been about the potential impact an outbreak would have on local property prices.

As news spread that a woman underwent emergency testing for Middle East Respiratory Syndrome on Wednesday, social media was abuzz as people discussed what could lie ahead for Hong Kong. 

Along with pictures of mask-wearing citizens and barricaded facilities at the Tsing Yi MTR station, where the suspected patient initially went to see a doctor, netizens also circulated various comments, some bordering on the bizarre. 

“Wait, I have not saved enough money for down-payment yet,” one netizen said, apparently regretting that the MERS came at a wrong time as far as he was concerned.

Property prices will slide if the MERS scare continues, offering a chance to snap up bargains, he was suggesting, while being rueful that he wasn’t in a position to take advantage of a downturn.

This sort of reaction is not one would see in South Korea, the center of the current MERS outbreak in the region.

Though nine people have died and more than a hundred fell ill due to the outbreak in the country, you don’t see South Koreans engaged in frenetic talk about a potential collapse in property prices.

But things are different in Hong Kong, a fact borne out by a near-500 points slide in the local benchmark stock index Wednesday within an hour of the news of the possible MERS case.

Tests on the woman eventually proved negative for the virus, but that is not going to stop the speculative frenzy in the city. 

One now wonders whether the talk of the adverse fallout on the property market would be a self-fulfilling prophesy.

Locals remember well what happened at the Amoy Garden estate during the SARS crisis in 2003 and the subsequent fallout on property prices in Kowloon Bay area.

During the outbreak, 329 residents of Amoy Garden were infected by the virus and 42 lost their lives. About half of the dead were from Block E in the housing estate.

Residents were quarantined for the first time in Hong Kong to ensure that the deadly disease would not spread to other neighborhoods. No more cases were reported in Amoy Garden after the quarantine as the government went an extra mile to sanitize the area.

However, let us examine what happened afterward. Some owners sold their flats and left the estate, disposing their properties for less than one million Hong Kong dollars per unit. A couple of 343-square-foot apartments even went for as low as half-a-million dollars.

Now, after 12 years, flats at Amoy Garden are priced at a minimum of HK$4 million.

This is consistent with the Centa-City Leading Index, which rose from the August 2003 trough of 33.1 to a record high of 141.96 in June this year. In other words, the index was up 420 percent in nearly 12 years.

Meanwhile, I also want to point out that a new residential project, Corinthia by the Sea, in Tseung Kwan O is offering a one-bedroom unit at a minimum of HK$4.76 million.

Average price at the project, located at a walking distance from where your writer lives and works, was up about 10 percent in the last ten months, media reports have noted.

Given such steep rise in home prices, it is no wonder that some people hope “SARS 2.0″ may give them a rare chance to buy at the dip.

People from the younger generation, some of whom may have taken the advice of young tycoon Lau Ming-wai to save at least HK$3,000 per month by skipping travels and coffee, may especially be counting on a slide in the property market to be able to afford down-payment.

Conversations at family dinner tables, meanwhile, are likely to see the youth directing this question to their parents: Why did you not buy a/another flat during the SARS crisis in 2003, or during the financial tsunami in 2008?

It is almost impossible for the property market to return to what it was in 2003, but people usually get smarter in dealing with adversity much better the second time.

But one shouldn’t forget the reality that saving for down-payment in Hong Kong can be as thorny as dealing with MERS.

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EJ Insight writer

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