Why is it that we continue to use auction results as an indicator of the health of the art market when they are obviously not an accurate representation of the health of the art market and do not reflect the sentiment and actions of buyers and sellers who are making transactions via fairs, galleries or brokers. At the moment sellers are abandoning the auction houses because they don’t want to risk having their works not sell or sell for below the estimate. Either of these two scenarios would be obviously detrimental to people’s perception of the value of the a particular work especially if the work was valuable enough to warrant media reports on the auction result. If sellers are making alternative arrangements to sell their work then there will obviously be a negative effect on the art auction industry yet no-one seems to be taking this into account when reporting on auction results.
If auction results were to be used as an indicator of the state of the art market then wouldn’t the reserves and estimates have to remain the same as they were prior to the financial crisis taking hold because by lowering the estimates and reserves the auction houses are manipulating people’s perception of the auction results by using what is effectively a tactic employed by the auction houses to lure bidders. Guaranteed prices for sellers and irrevocable bids for buyers also skew the results which means that works with either a price guarantee or an irrevocable bid should not be included in results used to determine the status of the art market. In a nutshell, there are so many ways that auction houses can manipulate auction results and market sentiment that auction results can never be taken at face value.
Most people seem to believe that if someone is willing to pay $50 million for a Picasso painting that had an estimate of $40 million that the art market is going strong yet if that Picasso painting fails to sell or only sells for $30 million then all of a sudden it’s all doom and gloom. What if the person who would normally have been more than willing to spend $50 million on the Picasso decided to spend his money on ten works worth $5 million instead?. What if the person who was going to buy the Picasso instead went to a gallery and bought another Picasso for $50 million?
Just because an expensive and highly desirable work of art fails to meet expectations doesn’t mean that the money isn’t being spent on art just that it isn’t being spent on that particular work of art. Just because only 60 percent of the lots at an art auction are sold or only 60 percent of lots are sold by value doesn’t mean that the money isn’t being spent elsewhere at fairs or galleries.
Renoir might have said that “There’s only one indicator for telling the value of paintings, and that is the saleroom” but in today’s market where manipulation of prices and sentiment is rife the saleroom is not the only indicator for telling the value of paintings. The only true indicator of the health of the art market is the amount of money that people are spending on art regardless of what it is or where it was purchased.
Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.
– Source: artmarketblog.com
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