The art market is facing a downturn in terms of sales at major auction houses such as Christie’s, Sotheby’s, and Phillips. It is expected that the key art sales in May will be down from the previous year, with a projected total of $1.2 billion. This amount signifies an 18% decrease from the previous year and almost half of the total from the May 2022 sales, according to ArtTactic. This decline comes as a result of a recent downward trend in the art market following its peak post-Covid, where factors such as cheap money, a booming stock market, and fiscal stimulus had driven record sales. Last year, global auctions of fine art experienced a 27% decline from 2022, marking the art market’s initial contraction since the pandemic’s onset in 2020. Additionally, the average price dropped by 32%, representing the most significant decline in seven years, as reported by ArtTactic.
Sales within the contemporary and postwar art category, responsible for substantial income and growth in recent years, plummeted by 48% during the first quarter of this year, according to ArtTactic. Despite auction houses asserting that buyer demand remains robust, the primary issue is the lack of supply. Collectors are hesitating to sell their prized art pieces in anticipation of a more favorable market environment. Moreover, the absence of significant single-owner collections available for sale this spring, like the Macklowe Collection or Paul Allen Collections from previous years, is contributing to a perceived decrease in the market’s offerings.
Dealers and art experts note a standstill in the auction art market regarding pricing, with sellers reluctant to settle for prices lower than those at the market’s peak between 2021-2022. Conversely, buyers are keen on securing discounts due to rising interest rates, uncertainties related to the upcoming election year, and geopolitical turbulence. Philip Hoffman, CEO of the Fine Art Group, describes the situation as a stalemate, with sellers seeking 20% more than buyers are willing to pay. The prevalent economic factors, including persistent inflation, increased interest rates, fears of an economic slowdown, upcoming elections, and geopolitical tensions, are fostering consumer uncertainty and reluctance to engage in art purchases.
Although buyers possess sufficient capital and willingness to invest, the deficiency of top-tier art up for auction is deterring activity. Collectors and art advisors observe a scarcity of “masterpiece” works capable of generating excitement this auction season. The highlights of the current auction season include renowned works such as Francis Bacon’s “Portrait of George Dyer Crouching” and Brice Marden’s “Event” at Sotheby’s and Christie’s, respectively. Despite the presence of these notable pieces, the overall sentiment suggests a lack of genuinely exceptional works to captivate buyers and incentivize enthusiastic bidding.
Art experts emphasize that the current market conditions present opportunities for buyers to acquire art at favorable prices akin to those predating 2022. The long-term prospects of the art market are perceived positively, urging individuals to consider investing in quality pieces under the current circumstances. While auction sales may be underperforming, the private markets and galleries maintain robust sales figures. These sectors are less reliant on investment returns and are, therefore, less susceptible to economic fluctuations and stock market volatility. Private sales conducted by auction houses are experiencing significant growth, enabling direct deals between buyers and sellers without a public auction format.
Overall, the challenges facing the art auction market in 2023 highlight a shift in consumer behavior influenced by economic factors, geopolitical uncertainties, and a limited supply of high-value art pieces. Despite the current downturn in auction sales, the long-term outlook for the art market remains favorable, with opportunities for buyers to capitalize on bargain purchases and build valuable art collections for the future.
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