Karolina Prawdzik is an art market researcher based in Luxembourg. She has a background in finance and alternative investments, with a special focus on luxury assets like gems and art. This is her analysis of the New York Contemporary art sales:
At the beginning of the 21st century, art buyers began to pay more attention to Contemporary Art than to the Impressionists and Modern Art. The result was a constant, stable growth of prices until 2007 when the Contemporary art market experienced a breakdown. The graphs attached here show the New York September Contemporary sales from 2007 until last month.

A possible explanation of this u-shaped recovery might be found in the obvious, the global financial crisis of 2007-2008 and the pessimistic market sentiment it created.

Investors lost significant amounts of money due to the crisis; they reacted in twofold way. Some of them withdrew from the art market. Some of them had to liquidate their art pieces to raise money. Both tactics resulted in lower selling prices. Also, the art sellers were more reluctant to put their works on the market because they would earn lower gains, thus they preferred to wait until a loss could be averted. Thus, the volume of the art works was lower.

In 2009-2010, the art market could stabilize partially because of the growing number of the buyers from the emerging markets (China, Russia, Singapore, India), as these investors were not that involved in the financial crisis.  Over time, the main reason for the recovery is more apparent – when the situation in the financial markets improved, the sales total volume bounced off the bottom. It makes clear that art market is strongly connected with financial markets.

Thus, the trend of increasing prices and sales volumes for the Contemporary art should continue as long as financial markets remain stable.