Art Market Blog – Don’t Panic, The Art Market is OK !!!
Unless you’ve been unconscious for the past few weeks you should all be aware of the major stock market fluctuations that have been dominating the finance headlines. Any sort of economic or financial rift is going to cause people to make speculations and predictions about how the art market will react, and this time has been no different. These wild stock market fluctuations are indications that there is a lack of confidence in the stock market which means that people have begun to question whether the prices being reached and the state of the market is justified and This lack of confidence was obviously not severe enough to prompt a major panic because no sooner had the market dropped considerably than it bounced back again.
Because the drops in the stock market have so far been short lived the art market has not had time to react and, unless the stock market sustains a more long term drop or experiences more long term turbulence, may not react at all. Unlike stocks, art cannot be traded quickly so any reaction to other financial markets takes a certain amount of time to take place, at least six months according to the figures. The first sign of problems with the art market would have to be related to the sale of art at auction since auctions are regular events that sell large amounts of artwork in one sale thus giving an indication of how whether the number of people buying art has dropped or whether the price people are willing to pay has dropper. I would like to emphasise that one bad auction is not enough of an indication that the art market is slipping because there are other factors that could cause an art auction to not be as successful as was predicted. One also needs to remember that the art auction season has not really got into full swing as yet which means that the full effect of the stock market fluctuations on the sale of art cannot be assessed properly. The current lack of art auctions also means that there are less opportunities for people to sell their art should they loose their confidence in the art market thus emphasising the importance of timing in people’s
So what does all this mean I hear you ask, well, short term turbulence in the stock market is unlikely to have any effect on the art market especially at this time of year but if the turbulence continues people may begin to panic and question the long term viability and stability of their investment portfolios. Having said this it is also important to remember that if the art market experienced a major drop in the prices being paid for artworks then there would most likely be a sudden wave of buyers coming onto the market hunting for bargains and taking advantage of the lower prices thus pushing the price of art back up again. This scenario is especially relevant in the current market because of the large amount of foreign wealth that may not be affected by problems with the financial markets in the world’s major economies.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.