This 13-year analysis of the February Contemporary Art Evening sales was made possible with data from our friends at Pi-eX. It is available to AMMpro subscribers. Subscriptions begin with a free month for the curious. 

If you had the feeling the Winter Contemporary sales in London last week were a bit of a letdown, you weren’t wrong. On a like-for-like basis, these sales have taken a big step back to 2016 levels when the overall market experienced a steep 16% decline from the previous year, according to Clare McAndrew’s recent report for Art Basel and UBS.

Add to that the big lump of the final price of David Hockney’s Henry Geldzahler and Christopher Scott which sold for £37m. But if we look at the composition of these sales in the chart below, we can see that the parallels to 2016 are quite strong.

Notice that the top end of the market of works over £10m is quite constrained. The effect is made greater by the largest single lot, the Hockney, not having an estimate so not showing up in the chart below.

So is the value of works sold below £10m but above £4m. The works estimated between £1 and £4m held up far better than the upper reaches of the market. Yes, the value generated by lots estimated between £1 and £4m is lower than the previous two years but substantially higher than in 2016.

This reflects the overall growth of this price band, the so-called “sweet spot” in the market where buyers are more comfortable taking risks and the auction houses make better margins. That observation, which you will see in a number of the market reports discussed published this week, needs to be tempered by the recognition that a greater number of works are being sold with third-party guarantees.

By our count there were at least 18 lots with estimates as low as £600k and up to £4m that were sold with third-party guarantees. That is a remarkable turn. The “sweet spot” isn’t so sweet if the added margin of the higher buyer’s premium is given away through third-party guarantees.

According to Pi-eX’s chart, the volume of sales covered by the third-party guarantees remained the same between 2018 and 2019. It was the volume of so-called “naked” lots that declined substantially. Looking at this chart it is hard not to conclude that never has so much been guaranteed for so little overall sales volume.

That leads to a conclusion surrounding estimate levels and bidding. Pi-eX provides us with three ways to look at estimates and bidding: overall performance, average lot performance and lot performance against bought-in value.

Without the Hockney, the aggregate lot performance was sub-standard, again echoing the performance of 2016’s sales. One has to go back to 2008 to find a similar performance. On an average lot basis, the performance echoes down years like 2016 and 2008. Bidders are expressing strong resistance to sellers’ expectations. 

Looking at the ratio of lots bid above the low estimate vs being sold at compromise prices or bought-in, we can see 2019 has the lowest amount of bidding since 2009. The value of works bought in is lower than 2018 or the similar 2016 but without the bidding activity that would offset those failure.

Finally, it is worth noting that Phillips sale last year contained a fair number of high-value Modern works that would have skewed the numbers slightly higher. But the market share tally shows a greater drop at Christie’s this year than at other houses if we correct for those Modern lots. All three houses had smaller sales this Winter too.