Art prices plunge by 7.5% in the first quarter 2008
The art market was bound to be affected by the turbulence seen in international stock markets this first quarter. As the impact of the subprime crisis rippled out through financial systems and the international economy, seven years of soaring gains in the price of artworks were brought to an abrupt halt. For the first time since the twin towers attack of 11 September 2001, the art market has been showing signs of a fall. According to the International Monetary fund, the financial crisis will cost close to USD 1 trillion. The IMF goes on to explain in its latest Global Financial Stability Report that the crisis has now spread beyond the US subprime market and, specifically, is now impacting the leading markets for office and residential property, consumer credit and corporate debt.
In this environment, nobody doubts that the Fine Art auction market, too, is starting to reflect the gathering gloom felt by investors the world over. In the first quarter of 2008, international art prices were 7.5% below those recorded in the last quarter of 2007. That said, because of the incredible 18% rise in 2007, this still left prices at 1 April 2008, 13% above those seen 12 months previously. As prices have fallen, so we have also seen an 18% reduction in the number of sales at auction compared to 2007. But tight supply has kept bought-in ratios relatively steady, at close to 35% in the first three months of the year. By taking a prudent line, setting realistic reserve and estimated prices, sellers and auction houses have been able to find buyers for 65% of lots on the stands. With the steep decline in the dollar, Europe felt the full force of the slump, and prices were down by 9% over the quarter. Art prices in the euro zone have slipped back to their year-ago levels, wiping out in three months a whole year of euphoric gains in 2007. The uptrend in volumes on the European art market, meanwhile, looks to have stopped dead in its tracks. In the USA, the Fed has been trying to stave off recession by one drastic rate cut after another, taking its Funds rate down from 5.25% in September 2007 to 2.25% by March this year. The impact of the financial crisis on the US art market may not become apparent for another month, when we see what happens at Christie’s and Sotheby’s prestigious Contemporary Art sales, scheduled for 13 and 14 May in New York. The weakening greenback and galloping inflation could actually give a short-term boost to auctions bid in dollars.
Christie’s is putting up a 1952 Mark Rothko on 13 May which, according to Brett Gorvy of Christie’s contemporary art department, may well set a new record for the artist. The piece will be offered alongside other major works of US expressionism, including a Sam Francis canvas from 1955, estimated at USD 4-6 million. The next day, Sotheby’s is offering a selection of pieces from the collection of Helga and Walther Lauffs, including major works by Yves Klein, Beuys and Piero Manzoni. In November 2007, contemporary art had a resounding success in New York. Sotheby’s recorded its all-time record auction on 14 November turning over USD 316 million at its Contemporary Art Evening, overtaking the prior record of USD 286 million set at its May 1990 Impressionist and Modern Art auction. The previous day, its rival Christie’s had achieved a turnover of USD 325 million. Already in May, Christie’s had sold contemporary art works for USD 385 million.
The price falls between January and April this year are in line with the trend in the Art Market Confidence Index (AMCI) over the last 3 months. At end-January, as global stock markets corrected violently, the art market confidence index moved into the red, with most respondents expecting art prices to head downward in the next 3 months. Since the start of March, with stock market indices looking less worrying, optimism has been gaining ground among market players and the AMCI went from a monthly average of -7.6 points in January (on a scale of +/-100) to +17.1 in March. This could suggest a degree of stabilisation in store for the second quarter.
In this environment, nobody doubts that the Fine Art auction market, too, is starting to reflect the gathering gloom felt by investors the world over. In the first quarter of 2008, international art prices were 7.5% below those recorded in the last quarter of 2007. That said, because of the incredible 18% rise in 2007, this still left prices at 1 April 2008, 13% above those seen 12 months previously. As prices have fallen, so we have also seen an 18% reduction in the number of sales at auction compared to 2007. But tight supply has kept bought-in ratios relatively steady, at close to 35% in the first three months of the year. By taking a prudent line, setting realistic reserve and estimated prices, sellers and auction houses have been able to find buyers for 65% of lots on the stands. With the steep decline in the dollar, Europe felt the full force of the slump, and prices were down by 9% over the quarter. Art prices in the euro zone have slipped back to their year-ago levels, wiping out in three months a whole year of euphoric gains in 2007. The uptrend in volumes on the European art market, meanwhile, looks to have stopped dead in its tracks. In the USA, the Fed has been trying to stave off recession by one drastic rate cut after another, taking its Funds rate down from 5.25% in September 2007 to 2.25% by March this year. The impact of the financial crisis on the US art market may not become apparent for another month, when we see what happens at Christie’s and Sotheby’s prestigious Contemporary Art sales, scheduled for 13 and 14 May in New York. The weakening greenback and galloping inflation could actually give a short-term boost to auctions bid in dollars.
Christie’s is putting up a 1952 Mark Rothko on 13 May which, according to Brett Gorvy of Christie’s contemporary art department, may well set a new record for the artist. The piece will be offered alongside other major works of US expressionism, including a Sam Francis canvas from 1955, estimated at USD 4-6 million. The next day, Sotheby’s is offering a selection of pieces from the collection of Helga and Walther Lauffs, including major works by Yves Klein, Beuys and Piero Manzoni. In November 2007, contemporary art had a resounding success in New York. Sotheby’s recorded its all-time record auction on 14 November turning over USD 316 million at its Contemporary Art Evening, overtaking the prior record of USD 286 million set at its May 1990 Impressionist and Modern Art auction. The previous day, its rival Christie’s had achieved a turnover of USD 325 million. Already in May, Christie’s had sold contemporary art works for USD 385 million.
The price falls between January and April this year are in line with the trend in the Art Market Confidence Index (AMCI) over the last 3 months. At end-January, as global stock markets corrected violently, the art market confidence index moved into the red, with most respondents expecting art prices to head downward in the next 3 months. Since the start of March, with stock market indices looking less worrying, optimism has been gaining ground among market players and the AMCI went from a monthly average of -7.6 points in January (on a scale of +/-100) to +17.1 in March. This could suggest a degree of stabilisation in store for the second quarter.
posted by Photography Collection at
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