Art Market Correction Statistics –

Art Market Correction Statistics –

Since the beginning of September, the art market has contracted for the first time since 1990. Although it survived 9/11, the meltdown of the global financial system has been too much for the “pleasure investment” market. The figures speak for themselves

Compared with January of this year, the average prices of publicly sold art works during October contracted 14.5% . Retrospectively, the end of 2007 – beginning of 2008 now looks like the market’s peak.
According to our data, the prices commanded by artists in all segments of the market – from the speculative top-end of the market to the affordable segments (<10,000 euros) – are being punished by the current context. Indeed, the value depreciation of “speculative” works tends to drag down values in the safer segments. Our figures show an equally strong impact in the small provincial auction rooms and at the major prestigious auction houses: since the beginning of October, the crisis has had a significant impact.

And nor is the ultra top-end of the market, where masterpieces change hands for hundreds of thousands or millions of dollars, exempt from this overall trend. Driven by demand from the nouveau riche in Asia, Russia and the Middle-East, prices were buoyant up until June. However, we see a clear contraction since the end of August. The bought-in rate has more than doubled in one year, growing from 25% at the end of 2007 to 54% in October 2008. Paradoxically, the prices of works presented above the 100,000 euros line (and which were successfully sold) have remained stable compared with the levels recorded 12 months earlier. On this segment of the market, bearing in mind the time lapse between the moment when works are valued and the final closing of the sales catalogues and orchestration of the sale, price adjustments are slow or inadequate. As reserve prices have not been adjusted to take into account the new market reality, the first expression of a new supply/demand equilibrium during periods of crisis is an increase in the bought-in rate.

Whereas the top-end of the market (4.1% of transactions) has shown relative price inertia, on the more dynamic segment of works offered for less than 100,000 euros, reactions have been more spontaneous: price adjustments are already underway. In this segment, the price index calculated using the repeated sales method has dropped 18% compared with October 2007!

The impact of the crisis has already spread around the world. Globalisation appears to be equally efficient in both directions; prices have contracted in New York, Paris and London – i.e. at the heart of the market – and in the new art market growth zones around Hong Kong, Singapore, and Dubai. The very latest results recorded in these new markets are extremely disappointing. Take for example the $16.9m overall revenue figure generated by Christie’s Middle East from its 29-30 October sales in Dubai compared with the $ 32 – 43m expected. In Hong-Kong in October 2007, Sotheby’s posted a bought-in rate below 10%. This year, at the same sales, this ratio was nearly 29%.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

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