It was always going to be a difficult few months. But is the slowdown, which started in September and has blighted the first months of this year, going to carry on? Some agents fear that it will.

Look for explanations and all roads lead back to the credit crunch: all manner of buyers are finding that they cannot secure a loan at a competitive rate. They report that lenders, already slow to pass on interest rate reductions, are using the smallest blip on a borrower’s credit record to deny a loan.

Nick Salmon, a director of Harrison Murray, an agency with branches in the Home Counties, said: “I don’t think the public has cottoned on to how serious this situation is. Seven out of ten credit applications are now being turned down.”

The problem is hurting the very group that the market most needs to be active: first-time buyers. Paul Holmes, chief executive of the website firstrung.com, said: “The market has not slowed so much as stopped.”

Some agents believe that his assessment is too harsh. A dire end to 2007 was actually followed by a better than expected January and February, with more sellers entering the market and different buyers emerging.

Certainly, amateur investors are in short supply. Robert Jordan, of Jordans letting agency in Manchester, said: “Smaller landlords are struggling at the moment, especially if they have bought off-plan and their guaranteed rent or their discount mortgage is coming to an end.”

But longer-term investors are snapping up anything their analysis tells them is a good buy. They have large portfolios, which grants them good scope for negotiating with lenders.

The Royal Institution of Chartered Surveyors this week reported that sales achieved at auction had fallen to 57 per cent in December, their lowest level in three years, a sign of a big mismatch between the price that buyers can pay and what sellers will accept.

But David Sandeman, of the Essential Information Group (EIG), which tracks auctions, reports a significant improvement since then, with sales rates back at 70 per cent last month. The reason? Cracking deals. EIG’s research shows new-build properties are selling at an average discount of 26 per cent to their previous price.

Marcus Jays, a former estate agent who now trades property in London, has also observed this resurgence in activity. His ability to sell on the homes he buys and then quickly refurbishes comes down to keen pricing. “I have one house in Hackney that three bidders are fighting over. This is because I did not price it at a premium because it was refurbished but priced it in line with other, ordinary family homes. That created interest.”

It is a sentiment that agents around the country would applaud. They say that sellers have reemerged since fleeing the market in September but despite the failure of buyers to follow them, many are proving unwilling to consider accepting a lower price for their home.

Primelocation yesterday reported that asking prices for the property on its website rose on average 3.1 per cent in London, 2.6 per cent in Scotland and 2.3 per cent in the South East last month. This is despite the latest Hali-fax house price index showing that eventual sales prices achieved were on average down 0.3 per cent.

Even with a new vogue for negotiation some bargain-hunting buyers are still likely to be disappointed in parts of the country. As Nick Salmon says: “Property is a safe investment over the long term and is all the healthier for all of this.”