2004 Art Market Trends
(excerpts)
www.artprice.com.au
Published October 2005
“…it is very likely that the auction star fifteen years from now – whoever that may be – has not yet sold a single work at auction.”
2004 Art Market Trends
The art market had a splendid year in 2004. Turnover at fine art auctions jumped by more than 30% on 2003, wiping out at a stroke the lingering effects of the 2001 slump. Much of this growth was due to high-profile auctions hosted by Sotheby’s and to an incredible increase of prices.
Art Prices Latest Trends
Art prices: +19%
Art prices are now at their highest levels since the speculative bubble burst back in 1990. The Artprice Global Index calculated using data on repeat sales reveals that following the fall auction season in New York, art prices rose by 19% in 2004. Taking into account fluctuations in exchange rates, the increase in euro terms was just 9.5% over the same period.
If prices continue to advance at the same pace as in 2004, they could well surpass November 1990 highs in 2005, thus taking art market prices to unprecedented levels. Collectors seeking to make substantial gains might by that stage consider it the right time to sell off some of their art assets they acquired in the 1980s.
Art Investment
Investment in the art market requires a knowledge of the markets for individual artists, but also of the associated investment risk. As with the stock markets, this is not insignificant. However, the art market is considerably less volatile. For example, from 1 January 1997 to 1 June 2004, the average quarterly fluctuation in the Artprice Global Index was two to three times smaller than the same statistic for the Dow Jones IA and the S&P 500. The art market is far less sensitive to economic crises and geopolitical events than other assets. Art prices held up well in the wake of the 11 September terrorist attacks and the Iraq war: our index contracted only 1.2% in the third quarter of 2001, and, in the first six months of 2003, it rose 7%.
As with stock markets, the art market contracts in times of uncertainty. The annual volume of art works sold at auction dropped 36% between 2000 and 2003. While stock markets tend to price in the slightest concerns investors may have, there is no automatic correlated reaction on the art market. In effect, rather than compromise on price, buyers and sellers of works of art become far more selective. At auctions, this translates into a higher bought-in rate: between 2000 and 2003 the bought-in rate rose by 9%. The quality of the works bought and sold guarantees the return on investment, while the lower sales volume fuels prices.
Contemporary Art
With a number of major sales in the modern art segment, 2004 was above all a very successful year for contemporary art which doubled its revenue of the previous year. According to Arprice’s econometric data, prices on the contemporary art segment rose 17% over the twelve months of 2004 with the segment accounting for 6.4% of total art revenue compared to 4.4% the previous year.
“…it is very likely that the auction star fifteen years from now – whoever that may be – has not yet sold a single work at auction.”