Dr Clare McAndrew of Art Economics was presenting key findings from the TEFAF Art Market Report 2016 at the TEFAF Art Symposium in Maastricht.
“It’s very tempting to generate media headlines by saying the bubble has burst and I would be hesitant to jump on that bandwagon just yet.”
McAndrew said that “the slightly more boring explanation” was the difficulty in sustaining “big escalations in value when you get to a certain size”.
She also pointed to the very varied performance of different regions around the world in 2015. “The US had a very good year, with sales increasing by 4%. Sales have never been better in the US. The big drag on growth during the year was China.”
The year before last, 2014, saw the art market at its highest ever value, with sales of $68.2bn. “The problem with getting that big is this is a marketplace with a very limited supply and so it becomes harder to keep pace, let alone grow,” McAndrew said. “So I wasn’t surprised that in 2015, there was some cooling in the art market.”
McAndrew defined a bubble as “when market prices rise beyond what can be explained by fundamental values…and [when] some kind of catalytic event takes hold, and there is a rush for liquidity. The bubble bursts and prices fall”.
The inflation in art market prices in the late 1980s, prompted by Japanese investors buying French Impressionists in particular, and then selling when Japan raised interest rates, was an example of a bubble bursting, McAndrew said.
“But the market now is a very different place. There are areas that are overheated – you see prices that have gone completely over the top – but the people buying at the high end are not completely speculative.”
She said that 2016 would prove “a very telling year” as to how the market is performing longer term, particularly at the high end of the market.