Property: Grab a bargain in the new year sales

The mad panic to spend, spend, spend in the run-up to Christmas eases off for a couple of days while we eat, eat, eat, and then continues in the January sales. But if you want a real bargain, forget about the house furnishings and fitments and carry on looking for the house.

Compared with other consumer spending and despite the amount of enforced leisure time, it is strange that the greatest British obsession - the property market - rarely gets a look-in at this time of year. House-hunters seem to take a break from December until the spring - traditionally a high point in the market's year. Throughout the summer, family buyers rush to complete before the start of the new school year in September, and the market reaches another crescendo just before Christmas with the race to exchange, so both buyers and sellers can enjoy the last festivities in their old home, while having peace of mind that the sale is underway.

So why does it quieten down in early January? There is still plenty on the market. Sellers don't remove their properties for the duration; they simply don't get advertised by the agents. But offices will be open, and reasonably empty. And there is plenty of time to view.

Savills Property Consultants generally sees a lot of new stock coming on the market in early January. A spokeswoman says: "Families sit down at Christmas, often the only time they are all together at once, and make decisions. 'We need a bigger/smaller home, with granny/without the children.' Sellers also get down to business when they are not at work. As soon as estate agents' offices open again after New Year, instructions start coming in."

For the seller, the house often looks its best - lived in, cosy and decorated with so much greenery it makes up for the barren garden (the reason why the market moves in the spring). I know of an old listed cottage which only looks its best in the dark days of winter - in half light.

For the buyer, less competition will mean, if not reduced prices, then certainly a reduced likelihood of gazumping. Barclays Consumer Research finds that the gap between buyers and sellers is narrowing - the figure earlier in the year of 14 potential buyers for every property is now down to under three per property.

New Year's Day house-hunters can be the first to take advantage of a practical move by estate agents to improve their image. Blamed for everything from gazumping to inflating prices to potential buyers' inability to find a property, the National Association of Estate Agents (NAEA) has launched a new Ombudsman scheme under which there will be a free independent arbitration service for anyone with a grievance, and examples of incompetence will be submitted to the Office of Fair Trading.

Early January is also an advantageous time to look for buy-to-let properties. From mid-1997 investors have been suffering from intense competition prompted by the increased borrowing power with buy-to-let mortgages, but the series of interest rate rises has caused a gradual decline in purchasers. Additionally, the fall in the Asian stock markets has resulted in decreased property investment from South-east Asia. Buy-to-let purchasers would do well to hunt out a bargain over the next few weeks, as vendors offload unwanted property in case prices do fall. Then by completing around February, properties can be let by early spring - traditionally the busy time for new tenancies.

Savills reports an unusually quiet run-up to Christmas. "This December has been quieter than last year, which was helped by a lot of publicity about the housing market's recovery. So it will be interesting to see what will happen in the next few weeks," says the spokeswoman. The company forecasts that the average British home buyer will not gear their mortgage borrowing to the same extent as they did in the past, with less wealth spent on house purchase and more put into savings.

Barclays' mortgage department reports a fall in lending compared with last year, and says it shows that confidence in continuing house price rises is waning. Repeated interest rate hikes are slowing the market, and home owners with standard variable mortgage rates under annual review will feel the effect of five rises at once. For example, a pounds 60,000 mortgage with the Halifax would have had repayments this year of pounds 335 per month. In 1998, however, the equivalent payments will be pounds 416 if the cut in Miras, which comes into effect next April, is included. An increase of 25 per cent may cause those considering a larger mortgage to think again.

The Council of Mortgage Lenders expects interest rates to rise again early in the new year, but then to fall again by the end of next year.