The Posturing of Connoisseurs Continues

Many art market commentators want to believe that the price acceleration of the last few years has been entirely due to “speculators.” Everyone talks about these speculators but no one ever seems able to identify them. Part of the problem is the simple success of the art market over the last few years. More buyers means more selling which, in turn, generates re-selling.

Most of the so-called speculation is a function of the art trade–and would appear to be carried out mostly by dealers and long-time collectors–satsifying the demand of new buyers. But the old art hands put it about that new savvy buyers have come into the market and cannily flipped pieces for profit, not love. That may have happened in some cases. (Few people think art funds have had a significant effect on the  market.) Most evidence suggests that the new buyers have been on the receiving end of these trades, buying works at inflated prices and getting “stuck” with them. That doesn’t sound very canny, does it?

Nonetheless, the idea of a good market and a bad market continues. Here, Godfrey Barker puts his oar in:

A tale of two art markets is emerging in talk in Bond Street – one bought by collectors which is without serious problems, another inflated by speculators which has fallen sharply. Dealers noted that the Old Masters’ night at Christie’s was preceded by successful November auctions with up to 99 per cent sold of Victorian paintings, Georgian furniture and silver, Chinese ceramics, fine wines, Fabergé, Islamic and Tribal art, Art Nouveau and Art Deco and Natural History, all sectors of the art business where financial game-playing is by and large unknown.

Unfortunately, the facts just don’t support this claim. Christie’s sale was a welcome success with many strong prices. But it did not achieve the low estimate for the sale. Here’s Bloomberg‘s tally:

The London-based company’s smaller-than-usual 44-lot auction last night of Old Master and British paintings made 14.7 million pounds with fees against a low estimate of 15.6 million pounds, based on hammer prices. Eighty percent of lots found buyers. Last December, Christie’s equivalent London sale made 18.8 million pounds from 70 lots with just 54 percent of the material sold.

There are two markets but they don’t seem to be a connoisseur’s market versus a speculator’s market. Instead, there appears to be a strong market for rare and exceptional works and then the rest of the market. That suggests many of the so-called new buyers are on the sidelines again.

Even in the Old Master market, the overall trend in dollar volume and average price is down. If you are a recent buyer, that’s a problem. But if you bought before 2006, prices have not eroded value for you yet.