So when US real-estate players last week admitted property sales in California, Florida and New York had fallen by half while prices had dropped 30 per cent from their peak, what can the Thai punters expect in the coming months?

To be sure, after a year of denial, US builders are swallowing a bitter pill and now anticipate a long slide that may bottom out in 2008, which gives Thai players 18 months to prepare for a very nasty pullback.

John Templeton, the investment guru who predicted the Asian stocks boom in the 80s and 90s, said last year US property prices could fall by as much as 80 per cent. Many pundits scoffed at his remarks, as they did when he predicted the Asian boom 20 years earlier.

To be sure, one hopes he is wrong, but there is no question that America's bust will have profound ramifications, because it comes at a time when prices in major cities such as London, Sydney and Hong Kong are at their highest historic levels. In short, we have a "perfect storm".

While cities that have not seen a price bubble will be much less affected, the Bangkok luxury market falls into the group of countries which have seen 100- to 200-per-cent price increases in the last five years.

Needless to say, the scenario augurs ill for speculators who are over-extended in expensive assets.

The slide in US realty will affect Thailand in more than one way. The slump per se won't be as worrisome as its impact in slowing down the US economy.

Essentially, trillions of dollars are tied up in the US property sector, involving banks, finance firms, builders, suppliers, professional agencies and above all general employment.

As the market implodes, it will bite into these related sectors with the probable outcome being a recession that may be more painful than many analysts anticipate.

Exporting countries such as Thailand and China should therefore begin to prepare.

The Thai property sector can learn from how China is mustering its forces to meet the challenges ahead.

Beijing has recently ordered banks to secure higher deposit rates for luxury apartments. Beijing is fearful that its own property bubble, which has expanded greatly over the past 15 years, is about to have a big fall. China has not seen a property crash on this scale since the Communists took control of the mainland over 50 years ago.

Beijing is desperately trying to engineer a soft landing without hurting the domestic economy.

It views the luxury market with acute reservation as it believes this sector contributes little in real production value to the overall economy while it sucks out precious liquidity that could be used for better purposes, such as improving the lives of its populace.

Thus the country has not penalised middle-class and working-class housing projects as it considers these sectors contribute positively to its domestic economy. Like most progressive economies, Beijing realises housing is a key bastion in stabilising its workforce.

Thai fiscal authorities should consider the Chinese position. Having survived the 1997-8 property crash, Thailand is fortunate that the memories of a property fallout from a five-year slump are still vivid in the minds of bankers, developers, builders and state authorities.

The big mistake in 1997-8 was cutting out all funding for developers, thus exacerbating the worst financial crisis the country has experienced; for when real estate is hard pressed, the entire economy comes to a standstill.

In the next shake-up, it is unlikely that Thai developers and fiscal authorities will repeat old blunders.

Then again, this being "amazing Thailand", and considering the calibre of leaders in the fields concerned, one cannot be too sure.

If one is optimistic that common sense will prevail, the next property down cycle will be much shorter and less damaging.

Few developers today are willing to hang on to inventory until they become totally insolvent. The tendency will be for a much speedier clearing of stock.

As Asian Property Development's president Anuphong Assavabhokin said about the last crash: "The key is to get into as much cash as possible to take advantage of the opportunities that come with a pull-back."

If all the key reforms to tackle insolvent businesses and non-performing assets that were made after the last crisis come into play, the good news is that the Thai market will bounce back much faster and be much stronger than before.

Itthi C Tan

The Nation