To the uninitiated, the art market might seem like a world out of reach; an alien planet ruled by experts in expensive suits, with plush auction rooms and unthinkably vast sums of money exchanging hands between anonymous dealers. Just last year, two paintings broke world records when they were each sold for around £205 million: Gauguin’s “When Will You Marry?” and De Kooning’s “Interchange”. It’s hard for the average person to imagine spending such a sum on a large mansion, let alone one painting, and in fact, we might be led to believe from such pieces of news that the art market is healthier than ever.
The problem is that, as with any industry, the art market is a complicated, politically driven business swayed by social change, public opinion and what happens to be “in fashion” at any particular time. And if you’ve read some of the recent headlines, you might be inclined to think that it’s entered a period of decline.
In May of this year, the famous auction house Christie’s held a sale entitled “Bound to Fail“. Though the name was chosen to highlight the challenging nature of the artworks, it has been noted that such a label reflects the current state of the art market – indeed, the auction house made a noticeably smaller sum than they did on their 2015 curated sale.
So just how far in decline is the art market? Should people thinking about making an art investment hold onto their money for now? Let’s take a look at the facts.
The Chinese Market in Decline
As reported here, global art sales definitely went into decline in 2015. The reason was a slump in the Chinese market, which pushed China into third place in the global market and the UK back into second place, after the USA. Cultural economists have attributed this shift to a widespread recession in the country, and the fact that the Chinese government are cracking down on corruption. This push has led them to scrutinise the kinds of transactions taking place in the art world, which has supposedly led to a reluctance to engage in sales.
Also of concern has been the fact that many artworks sold in China remain unpaid for; in 2014, 63% of paintings and sculptures that sold for over 10 million Chinese yuan (around £1 million) remained unpaid or only partially paid for – a marked increase from the previous year. Because of the influence that China has on the global economy, it’s no surprise that the slump in the Chinese market has had such a tangible effect on the worldwide art market.
However, though global art sales overall might have experienced a decline as a result of decreased sales in China, the American market seems to be going strong. While sales in the UK dropped by 9%, they rose by 4% from 2015 in the US.
Contemporary Art, Female Artists & High Value Pieces Winning Out
One important part of the art market puzzle is the fact that certain types of work seem to be selling well, while others are struggling.
As evidenced by the success of Christie’s “Bound to Fail” auction earlier this year (which found buyers for 38 out of its 39 displayed works), contemporary art is still selling well. However, at a sale of Impressionist and modern works by Sotheby’s the evening before “Bound to Fail”, almost half the lots went unsold in one of the auction house’s worst sales since 2009.
Alongside the current trend for contemporary art, it’s also been noted that female artists such as Bridget Riley are growing in popularity, no doubt due in part to the recent interest in feminism, women’s rights and female representation.
Perhaps most interesting, though, is the fact that sales surrounding ultra high-value artworks (i.e. anything over $10 million) seem to be steadily growing. Amazingly, in 2015, this sector accounted for only 0.1% of fine art transactions, but a whopping 28% of total sales. This is no surprise, considering the fact that the two most expensive paintings ever sold were purchased in 2015. It’s even less surprising when you consider growing wealth inequality across the globe; at the last count, it was estimated that the richest 1% on the planet possess as much wealth as the remaining 99%.
The Effect of Brexit Upon the UK Art Market
One thing that has been causing concern amongst British art professionals is the threat of a departure from the European Union. However, the experts can’t quite agree on whether or not this would be a bad thing. Some suspect that Brexit would lead to higher taxes, which would disproportionately affect the wealthy and therefore disrupt their influence in the art market. Others are convinced that it wouldn’t be negatively affected; after all, it is currently the second largest market on the planet.
The uncertainty surrounding Brexit has closely mirrored the uncertainty surrounding the art market as a whole. Ultimately, it’s hard to say just how far in decline the global art market really is. That’s because, even for the experts, the art industry is a confusing, challenging and ever-changing thing. As we’ve seen, it can be affected by global economics, social trends and even what sort of art is in fashion at any one time. One thing is pretty certain – by the time you read this, at least the Brexit-related uncertainty will have gone away!
An appropriate note to leave things on is that, if this article from Bloomberg is anything to go by, we could actually be seeing a gradual shift towards lower-end art. We’ve already seen that the ultra high-value art sector is still going strong, but apparently this is beginning to have a trickle-down effect right to the lowest-value pieces on the market. Huge, flashy, headline-grabbing sales costing hundreds of millions of dollars seem to be building confidence in everyday buyers; those who can’t afford a Gauguin or De Kooning, but who might be able to walk into their local gallery and spend a thousand pounds.
And if enough people start spending a thousand pounds on a painting every now and then? Well, then the art market as a whole has nothing to worry about.