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To many commentators, this chart of the London auctions over the last five years shows that the venue has somehow passed a test of the effects of Brexit and the new Trump administration on the art market. Whatever effect those two events will have on the art market in general and London as an auction capital in particular, the art market will have to wait and see. Neither event has truly taken place yet. The United Kingdom has not triggered Article 50 nor has it seen the real effects of removing itself from the European trade union.
More to the point, the weakness seen in the auction market beginning with last February’s sales cycle came before the surprise Brexit vote or the full impact of the US presidential election. Whatever the causes of the 2016 drop in sales volume seen here and across the Western auction market, the two political events were not directly responsible. The following charts cannot answer the question of what drove down auction totals. But they do shed interesting light upon the composition of the several markets represented in London.
This first chart shows the combined Evening sale totals at Christie’s and Sotheby’s over the last five years for the Impressionist, Modern and Surrealism sales. Three of the five years showed steady results within a tight range around £330m. Last year was the anomaly as sales were cut in half at Sotheby’s and fell by a third at Christie’s. The drop in volume did equalize what both houses were able to get sold. But during the years on either side, Sotheby’s pushed its dominance in the category. This year, Sotheby’s was able to make slightly more than 42% more than Christie’s in the same category.
Shifting to the day sales where the houses have been more evenly matched as they vend the type of work bought and sold by dealers and the occasional collector, the sales drop was far less pronounced. Except for the astonishing performance in 2014 when Sotheby’s out-sold Christie’s in the category by a ratio of 3 to 1, the day sale for Impressionist, Modern and Surrealist works has remained steady in the mid-£40m range.
The Contemporary market tells a similar story. The evening sales across all three auction houses rose steadily from 2013-2015. The success of the Fall sales in New York the season before the 2016 event should have predicted another strong year. And, indeed, looking at this year’s numbers, the sales level was reconfirmed (if slightly diminished from two years before.) It would be tempting to blame some of the sales dip in February on the newly installed leadership at Sotheby’s. February marked their first sales with a new team working through a disruptive situation. But the drop in volume was matched at Christie’s. Phillips seemed to be taking advantage of some of the market confusion to move its own sales totals upward substantially.
The steadiness of the day sales would suggest the top of the art market had gone elsewhere during the Winter of 2016. The ~£100m drop in sales volume in the Contemporary Evening sales could be accounted for in a handful of works trading privately instead of coming to auction, or simply not trading at all.
To reconstruct the mood of the markets, there was a period in 2014 & 2015 when buyers were reluctant to accept prices in private transactions without public confirmation of comparable deals. The market had moved quickly in those years leaving buyers wary of whether a dealer’s asking price was ambitious or backed up by the market. Consequently, a fair amount of work was consigned by dealers to auction to motivate buyers and allow a visible price to effectuate a sale.
It is entirely possible that the Fall sales provided enough confirmation to buyers that they were willing to shift back toward private transactions that had been somewhat artificially suppressed. Why the auction market would snap back so quickly without the encouragement aggressive guarantees, does put this conjecture somewhat into doubt.
Nonetheless, there’s a final point to be made with this chart and it supports other evidence. The increasing level of day sale activity, especially at Phillips, this year does lend more evidence to the notion that the Contemporary art market is indeed broadening.
Looking at the London sales in artist-specific detail might help determine that prospect.