How to distinguish a mod classic from a mod con

An eccentric young man wearing pink bunny ears was among 700 followers of fashion who crammed the first auction of "Modern Design" at Christie's South Kensington last Saturday. The auctioneers had not seen a crowd of this size for more than a decade.

With their Sixties miniskirts, Seventies trouser suits and studied scruffiness, this avant garde formed the front line in the London auctioneers' battle for the 20th-century decorative arts market. And, with the approach of the millennium, which will transform 20th century objects into period pieces, the battle is hotting up. Less than a fortnight earlier, Sotheby's had held its first "Design Since 1935" sale. The formula was the same: cream off newly hip post-war lots from boring old sales of "Decorative Arts Since 1860" and lure the beautiful people.

They turned up all right. But did they send the prices of modern furniture, glass and posters through the roof? Hardly. Unlike their clued-up counterparts in America and Europe, who have already prompted a boom and bust in 20th- century design and are now busy re-assessing reputations, this in-crowd had neglected to gen up their who's who of designers. Few had the confidence to bid, clearing the way for bargains to be snapped up by serious collectors, dealers and museums in Europe and the United States.

A 1988 welded sheet-steel armchair, Big Easy Volume Two, by Ron Arad, was knocked down for pounds 5,290 to a German collector. Ron Who? appeared to be the considered opinion of the fashionable crowd. If only they'd known: the bidding might have been pushed up closer to pounds 9,400 - the price of the remaining two armchairs in the limited edition of 20. The date 1988, the year the chair was designed, makes it likely that Arad worked on the armchair himself - a cachet conferring added value.

The chair's estimate had been low: pounds 2,000-pounds 3,000. "Somebody got a bargain" said a rueful assistant at Arad's London studio. "Oddly enough, we got no request from the auctioneer to advise on the estimate and no calls from would- be bidders to ask whether the chair is still in production."

Then there was the Warwickshire furniture maker Andrew Varah's 1992 rosewood high-back chair, a one-off and one of the Nineties' most original and elegant pieces of hand-made furniture. It was privately commissioned at a cost of pounds 2,800. At the sale, a British collector snapped it up for a pitiful pounds 437. "Not a well-known name", sighed Christie's auctioneer Simon Andrews. He had estimated the chair at a modest pounds 400-pounds 600. Clearly wasted on the trendies, it might have fared better in a furniture auction.

"Of all the pieces I have ever made, this one, for me, is the most evocative" a crestfallen Varah told me. "The client wanted a chair that looked like sculpture but could still be sat on. It seems to defy the mechanical properties of wood. Making the joints felt like inventing the wheel."

Less heartbroken at the niggardly price was London decorative arts dealer John Jesse. "The last thing we want in this new market is an invasion of investors creating boom and bust. It's healthier if prices rise slowly." Jesse, co-discoverer of the Victorian designer Christopher Dresser (his selling exhibition of Dresser in 1972 was a lucrative hit), has seen it all before. "I began selling Art Nouveau in 1963. You could have bought a Daum vase from me then for less than a fiver which is worth some pounds 2,000 today." He paid pounds 1,380 at the sale for a flaring Italian Venini handkerchief vase: "I'm going for amorphous shapes."

Four shapeless Fifties Italian Vistosi glass birds were fought over by German and Japanese collectors. Estimates ranged from pounds 400 to pounds 800. They fetched between pounds 1,265 and pounds 1,495.

"Modern objects with the most appeal are those that are progressive in their use of materials, style and technique and express the spirit of the time," says Christie's auctioneer Simon Andrews. "Sixties plastic and plywood can be progressive in just as historic a way as the use of walnut for the intricate Baroque carving of the 17th century."

Really outrageous objects, however, tend to be rejected by collectors. A wrought-iron and sheet-steel sculpture of a cactus on wheels by Jon Mills, estimated pounds 1,200-pounds 1,500, was unsold, as was the "Meadow Mat" from the Italian Gufram studio with three-foot high blades of polyurethane grass, offered at pounds 6,000-pounds 7,000 at Sotheby's.

Both Modern sales were successful; South Ken's totalled pounds 167,675 with 85 per cent sold by value, Sotheby's pounds 196,563, 70 per cent by value; the auctioneers are out to steal the market from the ever-innovative Bonhams, which began holding "20th Century Furniture and Design" sales five years ago.

Lacking the sophistication of American, German, Italian and Swiss collectors of contemporary design, the Modern market here is likely to remain a professional collector's market until we become more adept at assessing makers' marks and patina that distinguish original, 30-year-old pieces of furniture from the same designs still available in the high street. Originals are generally worth more than current equivalents. But, as ever, it's not as simple as that. The Arad armchair scoop gives the lie to that, and the London contemporary furniture dealer Simon Alderson gave me other topsy turvy examples - including the heart-shaped Arne Jacobsen plywood- and-tube chair that Christine Keeler famously used to hide her charms. Genuine Fifties versions can be had at auction for pounds 60-pounds 80, compared with pounds 100 for less captivating brand-new ones in the shops.

Christie's South Kensington (0171-581 7611), Sotheby's (0171-493 8080), Bonhams (0171-393 3900).