Colin Gleadell drills down into the returns on London’s Contemporary art sales. Finding massive short-term gains, he wonders how long this market can sustain itself, then offers a few cautionary reminders of former stars whose prices have faded. Gleadell is right to remind buyers of the fleeting fame of many artists but focusing on these gains is a bit misleading.

All that the disparity between prices paid at galleries and those achieved flipping at auction shows us is the volume of truly disposal wealth that many of today’s collectors have. Also, it is worth looking at an artist like Jacob Kassay (above) and the works that ignited a buying frenzy at auction 3 1/2 years ago. Among the same sale results was another untitled silver work that Phillips was able to sell within estimates and for price commensurate with his 2012 levels:

More remarkable than the record prices are the gains made on these works since they were acquired when first exhibited. Doig’s rainbow painting would have cost about £35,000 in 1999, and so represents an average annual gain of 44.2 per cent over 15 years. Anderson’s 2009 works have risen by an average of 78.4 per cent per annum, and Ghenie’s 2010 painting by an average 163 per cent per annum.

Yet these gains pale in comparison with those for the youngest generation of so-called “process” painters, such as Oscar Murillo and Lucien Smith, whose abstractions made with studio dust or spray guns have risen by as much as 3,000 per cent in a year on the back of unprecedented, rampant speculation.

Last week saw new records at Phillips for recent work by David Ostrowski (£170,500, or a 325 per cent increase on gallery prices) and Christian Rosa (£98,500, or a 300 per cent increase on gallery prices).

This is a phenomenon that no sane market can sustain, and scattered among the results were warnings from the past. A Damien Hirst spot painting bought in 2007 for £375,000 sold for £188,500; and a Matthias Weischer painting bought for £180,000 in 2007, when he was all the rage, sold last week for £86,500 – timely reminders that the value of contemporary art can go down as well as up.

Arts Sales: can the market sustain these rises?  (Telegraph)