The current state of the art auction market is experiencing a decrease in sales, with major auction houses such as Christie’s, Sotheby’s, and Phillips expecting a decrease in sales during the upcoming May auctions. This follows a decline in sales from the post-COVID peak, which was driven by cheap money, a thriving stock market, and fiscal stimulus. Last year, global auctions of fine art also witnessed a significant fall, representing the first contraction since the onset of the pandemic in 2020, with a drop in both the number and average price of auction items.
The recent decline in sales is attributed to wealthy buyers and sellers taking a break from the frenzied prices seen in 2021 and 2022. Dealers and art experts suggest that the auction art market is currently stagnated due to a disagreement between sellers and buyers. Sellers are demanding a 20% higher price than they might have obtained during the market’s peak, while buyers are requesting a 20% discount owing to factors such as rising interest rates, political uncertainties, and uncertain economic conditions.
Despite the reduction in sales, demand from buyers still exists. However, the problem lies in the insufficient quantity of top-grade artwork available for sale. Major single-owner collections, such as the Macklowe Collection and the Paul Allen Collections, that contributed significantly to earlier sales, are absent this spring. As a result, there are fewer high-value items being offered for sale, with only a few pieces worth over $30 million each being presented this season.
Experts advise potential buyers to take advantage of the present market conditions to acquire works at reduced costs, with the expectation that art investments will continue to yield favorable returns over the subsequent decade. Private sales and gallery transactions remain robust, primarily because these transactions are less affected by economic and stock-market fluctuations. Auction houses, including Christie’s, are also experiencing substantial growth in their private sales division, where they arrange sales between buyers and sellers without holding public auctions. For instance, Christie’s recently sold a Mark Rothko painting to Kenneth Griffin, a hedge fund billionaire, for more than $100 million through a private transaction, avoiding the risk of a failed auction, which could harm a work’s worth.
Overall, despite the decline in sales, the long-term prospects for the art market appear promising, according to experts. However, the market’s current instability makes it difficult to predict how the market will fare in the short term.
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