Defining Art Market Movements – artmarketblog.com
Regardless of whether you hear that the art market is just undergoing a correction or is experiencing a full blown crash you can take comfort in the fact that the terminology used to describe the current state of the art market really makes no difference. For starters, there is no real definition of exactly what has to happen for a correction or a crash to occur and secondly there is not sufficient data available to make a judgment even if one was able to define the current state of the at market. When I say that there is not sufficient data available I am referring to the fact that not all sales are publicised with current estimates indicating that only 40% of art sales are auction sales leaving 60% of sales of art to private dealers. Private sales made through galleries, dealers and brokers are rarely publicised meaning that any figures relating to the status of the art market will be missing the data from around 60% of art sales. Yes, it is possible to get an idea of the performance of the private sale sector from dealers but if you are going to make an accurate definition in relation to the current state of the art market you need figures and not just opinions. What all this means is that the perception people have of the market really depends on how much the person (media) making the judgement on the status of the art market is depending on scaremongering tactics to attract attention or create buzz.
I think the most important thing to remember is that a period of consolidation and adaptation will change very little over the long term with prices due to escalate again once the financial crisis ends and people’s confidence in their financial situation and access to wealth increases. This isn’t the first time the art market has taken a hit with the last major shift from a sellers market to a buyers market taking place in the early 90’s. Although the circumstances last time around were far different from what they are today the fundamental climate of over-inflated prices caused by irrational buying remains a constant. Most serious collectors and investors would have learnt from the early 90′s correction but there are obviously still plenty of people who either don’t know their art market history or chose to purposely ignore the past and risk being severely burned in exchange for the potential to make big money in a short space of time by flipping art. Those collectors and investors who have taken the correct long term approach to the art market will hardly be affected by the current situation and will continue to hold onto their works while riding out the storm.
If I was going to use a word to describe the current art market situation I would use the word adaptation, an art market adaptation, because that is what the art market is doing, adapting to the current economic climate. Another term I would use to describe the current art market is consolidating which is defined by reference.com as “to discard the unused or unwanted items of and organize the remaining”. I am going to leave you with this quote from confidentstrategies.com that I think defines the way people should be viewing the current state of the art market: “A correction is often considered beneficial for the long term health of the market, in that prices had risen too quickly and the drop put them back to more realistic levels where investors again see attractive value.”
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.