After five consecutive quarters of contraction, the art market is at last producing some positive signals. Artprice’s index (the Art Price Global Index) progressed 4.97% in the second quarter of 2009 after a fall of more than 30% since the beginning of 2008. Gradual economic recovery during 2009 (very modest economic growth in Germany and France for example) has boosted the morale of art market players and has added 20 points to our AMCI since the end of the first quarter.
After the effects of the financial crisis pushed up auction bought-in rates to 45% during the autumn of 2008, the auctioneers adjusted their offer by proposing fewer lots, lower price estimates and no guarantees (except in the case of truly exceptional works). This strategy appears to have worked during the first half of 2009, as the bought-in rate has fallen to 40%. During the autumn of 2008 only 44% of the sold auction lots got past their low estimates; but the revision of price estimates has improved this ratio to 49% on art sales recorded since the beginning of 2009.
By lowering their expectations, the auction houses have supported a market of more affordable works. 79% of sold lots fetched less than €5,000 during the first half of 2009 versus 73% in 2008.
The art mediums most affected by price reductions appear to be painting and multiples. They lost respectively 31% and 41% in 2008 and a further 4% and 5% in the second quarter of 2009, taking them both back to 2004 prices.
Prices are continuing to adjust for Post-War art and Contemporary art, having contracted respectively 9% and 4% in the second quarter of 2009. As the two most speculative segments of the art market between 2005 and 2008, they have indeed been the most affected by the crisis, and the Contemporary works bought at very high prices a year or two ago are unlikely to be presented for auction in the current context.
The New York market, having taken a 27% tumble in 2008 (i.e. an average contraction of 7.75% per quarter from 1 January 2008 to 1 January 2009), posted a 10% increase in art prices in the second quarter of 2009.
These good quarterly performances are partly due to the new strategies adopted by the auction houses. We will wait until the results of the 2009 autumn sales before deciding whether these figures represented a genuine recovery or just a short-lived surge.
Although the art market meltdown at the start of the 1990s was structurally very different from the current context, it nevertheless produced a series of surges over the years that followed. Remember that in just two years, from 1990 to 1992, the crash took art prices down by 44%, and it wasn’t until 1995 that a return to sustained growth really set in with three consecutive quarters of rising prices.