Clare McAndrew’s TEFAF report for the art market in 2013 has a lot of detailed information. As always, it is important to remember that her numbers are based upon auction sales, interviews with dealers, questionnaires and a healthy dose of interpolation. In other words, the art market remains a murky place despite these authoritative looking numbers. However, McAndrew is consistent in her methods. So looking at relative change should be a safe place to explore the state of the art market.
The chart above redraws some figures McAndrew presents on yearly value of the art market (blue line/left axis) and the overall number of objects that change hands (red bars/right axis.) The first thing to notice is the rise in value in 2006 which brought a rise in the number of objects in 2007 to a dramatic market peak.
Since that time, the number of art works sold each year has remained fairly consistent in the range of 35m objects. Averaged over the entire period from 2006 to 2013, the yearly turnover of objects was 37.5m. So the post-Credit Crisis art market has been running steadily below that boom-skewed average.
We can also see from this chart that market value recovered even as the object turnover was reduced. That lends credence to those who point to the monetary environment as a source of market value. Art works as an asset class have been inflated along with other assets by easy-money policies.
The same data offers insight into another question about the art market. Are we in a bubble? McAndrew also provides us with a chart of the percentage change in value and volume year over year. The bar graph above shows the percentage change in each from the previous year. Here you can clearly see that a dramatic change in the value of art in 2006 created a dramatic increase in the volume of art works sold in 2007.
However, as the art market recovered in 2010 with a similar vigor to 2006, there was no corresponding spike in supply the next year. In fact, 2011 was the peak year for the art market post-Credit Crisis. The response from the art market has not been a frenzy of sales but a fluctuation around a new price a volume level. The market seems to be settling in to a new normal instead of experiencing volatility.
