We have found our ideal property but it seems to have a damp problem, should we avoid it ?

With the current increase in the amount of property on the market, relative to the number of buyers willing or able to take the plunge, it’s understandably tempting to walk away and look for something else.
On the other hand…if this property really is perfect for your needs, then I wouldn’t rule it out altogether. Obviously, I haven’t seen it for myself – and in any case, I’m no expert on these matters. Nevertheless, it sounds to me as though this could be nothing more than a simple condensation problem. This is actually quite common with older properties that have been comprehensively modernised, and ironically it’s often the double glazing that is to blame.
The thing you need to remember about older properties is that in their original state they were notoriously draughty. A combination of ill-fitting sash windows and doors, plus open fires in most rooms, ensured that these places basically leaked air like a sieve. This obviously made them difficult to heat – but it also meant that there was a plentiful supply of fresh air to stop the build-up of warm, moisture-laden air. Result: little or no condensation.
Contrast that with the situation today, when we try to make our homes as airtight as possible in order to minimise energy consumption and wastage. Which is not too bad in a cavity-walled property built to modern insulation standards (although even here, you can still get condensation and even mould on window frames in winter). In older, solid-walled properties, however, the combination of highly effective heating, cold outer walls and little or no natural ventilation is almost a guaranteed recipe for serious condensation problems – particularly in kitchens and bathrooms.
Hence, I suspect, the smell of damp in the property you recently viewed – in which case, it is easily cured by improving the ventilation. Obviously, you would need to get it thoroughly checked out by a surveyor, or even a damp proofing expert. Nevertheless, I’d be inclined to give the place the benefit of the doubt and make an offer. After all, even in times like these, ideal homes don’t turn up all that often!