In 2009, the total value of sales in the secondary market fell 23% compared with 2008, although certain genres such as Aboriginal art only dropped 5%. Overall, conditions did improve in the second half of 2009 and the broader art market has shown some resilience in the face of the challenging global economic conditions.
Cautious buyers focus on the middle ground - sellers hold back
The market demand for certain types of art also evolved during 2009. In 2007, 22 pieces sold for more than $1m, in 2008 there were 7, and in 2009 only 2 pieces sold for more than $1m. Whilst it is generally acknowledged that 2007 was an abnormal year, the trend to lower value art is clear.
In 2009, record prices for artists were generally found in the sub-$500,000 price bracket where buyers had moved to find greater value rather than higher profile. For example, records were set for David Larwill at $216,000, Fred Cress at $144,000, Adam Cullen at $26,000, George Tjungurrayi at $72,000 and Kathleen Petyarre at $96,000.
In the same year, auction clearance rates increased from 65.6% in 2008 to 68.5% whilst the number of works offered at auction decreased 6.9%. This indicates that sellers were holding back waiting for conditions to improve.
Putting performance into perspective
Looking at the long term growth rate from 1990 to 2006 (growth of 12% CAGR) and re-assessing the abnormal year of 2007 with 12% growth over 2006, we find the overall underlying decline in market value to be 25% between 2007 (re-assessed) and 2009. That's less than half the percentage drop the market saw in 1988/89 to 1990 during the last technical recession in Australia. The market is almost 3 times the size it was in the late eighties and the breadth of sectors available now seem to have contributed to its increased resilience over the last 12 to 18 months.
New horizons
In 2010, we expect the trend to more conservatively priced artworks to continue. But that does not mean lower priced art for high value artists. That means more market demand for pieces in the lower value sectors.
We expect strong demand in the sub $250,000 sector in the coming year. However there are already signs that some significant pieces might be hitting the market.
The latest auctions in February 2010 by Christie's and Sotheby's also reflect an improved climate. A life-size bronze sculpture by Alberto Giacometti, "L'homme qui marche I" ("Walking Man I") was sold for 65 million pounds (AU$107.7 m), more than 3 times the upper estimate of 18 million pounds (AU$29.7 m) , at the Sotheby's Impressionist and Modern Art evening sale in February. We also feel that sellers of these pieces will remain on the sidelines for a while until the auction houses start to lift their (still conservative) pre-auction estimates. The Auction market tends to be a lagging indicator in this sense and we expect the total market to remain flat or show slight growth.
The key will be - as it always is - to review the specific sectors and specific artists within the overall market.
Why not call one of our experienced art advisors on 02 8832 4300 and start your art investment portfolio.
