The Glut of Guarantees and Squelched Bidding—Are These Signs of a Market Top?

The always valuable Colin Gleadell has some important observations on the New York Contemporary art sales well worth noting. When the art market rises as far and as fast as it has in the last year or two, a debate always arises about whether the market is experiencing a new level-setting stage or over-heating. On the whole, the reaction to last week’s sale has been gob-smacked disbelief more than vertiginous anxiety.

Gleadell builds the first substantive case that we may be reaching the crest of this latest wave (which might not be such a bad thing.) He focuses on the 22% of the 280 Evening lots that were guaranteed and how the bidding on those lots was squelched. Gleadell highlights the fact that the week’s top lot was not guaranteed. Nonetheless,  Christie’s CEO and head of Contemporary art both insisting on the large number of buyers lining up to bid:

The situation is reminiscent of the pre‑credit crunch days, when auction house guarantees were the norm to get valuable works for sale, but which backfired when the crunch came. Another parallel to those days is the number of top lots that sell on one bid only or back to the guarantor – an ominous sign that the market has over‑reached itself.

And then there is the invasion of new buyers from Asia, and China in particular, where there are hidden mountains of debt. Those with longer memories will recall the Japanese invasion of the impressionist market, which was left in tatters after the global recession of the early Nineties.

And yet, Steven Murphy waxes lyrical about the pure love of art that is driving the market. “It is not the promise of financial return that is creating the urgency to own art,” he says. But who is he kidding? Rising prices are determining supply in the contemporary art market, especially now when speculators in the market for new artists are rampant. For buyers, it’s also about buying status, and that in itself is an investment.

Art Sales: The $2 billion art bonanza (Telegraph)