It's post-mortem time for contemporary art, the highest flying area of the art market. After several years of unprecedented growth, which have seen prices at auction increase by an average 25 per cent each year since 2002, it experienced a definitive setback in New York last week.
In spite of spirited bidding by some of America's top collectors, the keynote auctions at Sotheby's, Christie's and Phillips de Pury & Co drummed up just $331 million (£224.6 million), far short of the low estimate of $608 million that had been set in the months before the collapse of the banking system.
The total was almost one third of that mustered in the last New York auctions in May, and we have to go back to 2005 to find comparable sales figures. The clock for contemporary art has turned back further than for Impressionist and modern art, which has fallen back to 2006 levels, because its growth curve was much steeper.
The top end of the market looked particularly vulnerable as several of the highest-valued lots by Roy Lichtenstein ($15 million to $20 million) and Francis Bacon ($40 million to $60 million) failed to attract bids. As at the Impressionist sales, only about 60 per cent of works were sold, mostly below estimates after staff had persuaded sellers to reduce their "reserve" prices (the minimum prices at which they would sell).
Brand-name artists who have ridden high on the speculative art boom suffered. Only 23 out of 70 works by Andy Warhol, the bellwether of the contemporary market, sold. The lower reserves allowed fashion designer Valentino Garavani, sitting in the front row at Sotheby's, to buy two - one of which was a large painting of a dollar sign for $2.1 million, comfortably below the $2.5 million estimate.
advertisementDamien Hirst's phenomenal £111 million London auction in September seemed a million miles away as 11 out of 17 of his works, some bought just last year in the hope of realising a quick profit, were returned to their owners. Other fashionable artists, such as Richard Prince and Takashi Murakami, also took a hit.
For those who had predicted the downturn, such as Los Angeles collector Eli Broad, the reduced prices presented opportunities. At Sotheby's he bought four works including a minimalist sculpture by Donald Judd, which cost $1.1 million compared to the $2.7 million it fetched in 2006. No wonder he called it a "half-price sale".
The results did not come as a shock. Before these sales, Christie's Brett Gorvy said he was concerned about the new buyers who had come into the market, the fashion-followers who are not "real collectors per se - they've got the handbag, so now they've got to have the painting. They could disappear as soon as they came." And sure enough, most stayed away. "We had no new buyers this time," said Gorvy afterwards.
"You can't have increases like that unless people are buying for investment purposes or everyone is leveraged," said one art advisor about the boom. "Prices in the art market will probably come down to the point before everyone began leveraging, probably another 30 to 40 per cent."
Yet gains are still being made, and that will keep the market going. An impressionistic painting by Phillip Guston, bought in 1996 for $1.7 million, sold, albeit below estimate, for a record $10 million. Second-tier American Pop artist Tom Wesselman had been fast catching up with his peers. His Sixties canvas Still Life #58, which fetched $149,000 in 2000, sold below estimate, but for $2.4 million. Buster Keaton, a sculpture by Jeff Koons bought by New York real-estate developer Aby Rosen two years ago for $2.7 million, sold for $4.3 million.
The market also proved strong for artists with substantial reputations, but who had not experienced rapid price growth - the sculptors Alexander Calder and Richard Serra, for instance. And where there was something of exceptional rarity, prices flew. A surrealistic box of found objects in glass jars called Pharmacy by Joseph Cornell, once owned by Mrs Marcel Duchamp, sailed to a new record of $3.8 million. An unusual early painting by the Japanese artist Yayoi Kusama also far exceeded estimates to sell for $5.8 million.
The buyer was Philippe Segalot, who advises Christie's owner François Pinault on his collection. Another seasoned collector, S?I Newhouse, was said to be the mystery telephone bidder who paid a record $5.5 million for John Currin's Old Masterly painting, Nice 'n Easy.
As for the future, a market driven by such experienced collectors could see the fashionable names of the past decade going for knock-down prices. "It'll be back to basics," says Gorvy.