A More Humane Art Market
A MORE HUMANE
ART MARKET
Artnet recently published their biannual report on the art market (a mid-review of 2024) for their Intelligence Report series. Intelligence Report offers Artnet’s broad grasp of the art market, its trends and behaviour. We will caveat that the report is, understandably, limited in scope, market data is much easier to access from the top four art cities the report covers: New York, London, Paris and Hong Kong.
TLDR: the art market is experiencing unprecedented shifts, significant dips in attention and sales across all sectors of the market is hitting the industry hard. Check out these numbers, they speak for themselves [1]:
-
$5.05 B: total spend on fine art at auction in the first half of 2024 is down 29.5% from the equivalent period in 2023.
-
There has been a 29% dip in total sales generated by the big three auction houses - Sotheby's, Christie's and Phillips - compared to last year (2023).
-
The total number of lots that sold for $10 million or above in the first half of 2024 is down 18% compared with the same period in 2023.
-
The average price (USD) of fine artwork sold at auction in the first half of the year is down 26% from the same period last year (2023).
-
The sum of money (USD) spent at auction on ultra-contemporary work—by artists born after 1974—through June 30 is down 39% from the same period in 2023.
-
There has been a 30% drop in the total value of fine art lots that sold for $10 million or above from January 1 to June 30 this year, compared to the same period in 2023.
During a recent visit to London over July and August to explore a potential expansion for Art Again there, I heard numerous accounts of industry players closing long-established galleries and leaving the city altogether.
Photograph: I attended Elton John + David Furnish's photo series Fragile Beauty at V&A.
The art market, once brimming with exuberant speculation during the pandemic, is now grappling with a significant decline in attention and sales across all metrics. A potent combination of global economic instability, persistently high interest rates, geopolitical tensions, and plummeting resale values has forced auction platforms, galleries, and dealers to downsize, offer discounts, collaborate for survival, or shutter entirely.
However, there is a silver lining. This drastic shift in collector behaviour may have spurred a broader transformation in the art market. From the hyper-commodification of art that peaked during the pandemic to a more thoughtful, sustainable approach to art appreciation—could this change herald a future where financial speculation (and that dreaded return on investment (ROI) question) gives way to an emphasis on the intrinsic qualities of art? Is a more “humane” path forward on the horizon?
Rise and Fall
During the pandemic, the art market experienced a speculative boom fuelled by low interest rates and abundant liquidity (AKA money was cheap). Emerging artists saw their prices surge, with eager speculators betting on future returns, driving primary and auction sales to new highs [2].
However, the post-pandemic market has drastically shifted. Rising interest rates and global economic uncertainty have caused a sharp decline in both primary and secondary market sales.
Galleries, even blue-chip players, have struggled to sell works over the past two years, with collectors increasingly attributing this to over-inflated primary prices. This strain has led many galleries to offer significant discounts in an attempt to move inventory.
More than a dozen galleries in New York, including established names like Mitchell-Innes & Nash and younger, innovative spaces such as Simone Subal and David Lewis, have closed within the past 12 months.
Photograph: after nearly 30 years, Mitchell-Innes & Nash has closed their gallery space and transitioned fully into advisory work.
Auction houses have faced similar challenges. Despite efforts to innovate, including Sotheby’s recent simplification and removal of the buyer’s premium (the auction house’s biggest change in its fee structure in 40 years), sales remain sluggish. The resale values of once-coveted pieces have collapsed, causing pandemic-era speculators who entered the market eagerly at its peak to divest their collections at significant losses.
While the ultra-wealthy have remained somewhat insulated from the full brunt of the downturn, even they are exercising caution in the face of unprecedented uncertainty. Many have deferred payments and significantly reduced their spending on new acquisitions.
Meanwhile, the mid-tier market has been particularly vulnerable. Mid-level collectors are feeling the pressure of high interest rates and a shrinking buyer pool, leading to further gallery closures and exposing the challenges of sustaining the middle segment of the art market. Liquidity has dried up considerably in this sector, with some collectors turning to auctions to find bargains, where works are now selling for as little as 10% of their original gallery prices.
A 2018 painting by Vaughn Spann, Dalmatian No. 6 (Martha's Vineyard), failed to find a buyer at $30,000 to $40,000, an 80% percent drop in estimate compared to works from this series at auction for as much as $151,200 in 2022 [3]
In today’s climate, the speculative investments that once drove the art boom have largely lost their appeal, with many collectors pulling back to focus on more personal or philanthropic pursuits. The collapse in resale prices for previously prized works has forced many in the art world to reassess their strategies, marking a significant reset for the market.
Art Beyond ROI
In the wake of the pandemic bubble burst, many collectors were left holding once-desirable works facing disappointing returns, which especially affected those who entered the market at its speculative peak. Buyers are apprehensive, and art transactions have slowed to a crawl.
Reading Artnet’s mid-year review reminded me of a particular incident early in Art Again’s days. I was explaining what we do at Art Again to a partner at a fund and his first question for me was how does Art Again guarantee ROI (Return on Investment) on an art acquisition on our platform. I remember inadequately explaining why we are apprehensive about advising on ROI.
The over-commodification of art during the pandemic left a bitter taste for long-term patrons, as they found the market focused too heavily on monetary returns rather than emotional and cultural value. This dissatisfaction has spurred a shift in the art world, and we’re observing many market players rethinking how art should be appreciated and consumed. Sadly, it does not escape us that it only took an unprecedented slump in global art transactions to spur the shift.
For its big May sales in New York, Christie’s highlighted multimillion-dollar paintings of flowers as a refreshing escape from the depressing state of the world.
Photograph: George O’Keeffe's Red Poppy (1928) sold for $16.5 million in New York in May at Christie’s, which showcased flower-themed works.
It’s no longer about hoarding or speculation. Today market players are adjusting to the slower pace by rethinking how they operate and adopting new approaches to generate excitement around art while deemphasising the talk of money. Fresh approach is being taken by auction houses to embrace collaboration and increase participation around art, even curating art that offers an escape from the depressing state of the world.
“Artists who had lived healthy lives, having a show every few years, always selling out, and having a very devoted buyership, for so many of these artists, the market completely stopped,”
“The smartest way for an artist to reset is to go underground, to reinvent yourself and come up with a new idea. The worst thing to do is to keep churning out shows.”
- Allan Schwartzman, author of Topologies, Street Art, The AIDS Project, at the Talking Galleries New York conference in April.
This rethinking is leading to a more considered appreciation of art, encouraging buyers to reassess their strategies, with a shift away from speculative gains towards intrinsic value.
Today, when asked about ROI, which understandably remains a common, if not a leading question, I explain that at Art Again, we are in the business of rehoming art, not reselling or even recirculating. Don’t get me wrong, the latter two are equally true, our mission just centres on finding the right home for each piece. We’re committed to a scaleable business model that retains the ability for our users to foster a deep connection with art that goes beyond financial returns.
“In a reset like this, there’s a silver lining: true aficionados now have a chance to connect with art’s intrinsic value.”
A Truly Sustainable Art Market
We’ll always sing the same tune.
Sure, we hear about the art market historically outperforming financial indices like the S&P 500 (see Masterworks), but these comparisons ought to come with some important caveats [4]. At Art Again, we reject the fixation on ROI, and instead champion art for its intrinsic value—its power to inspire, challenge, and create cultural impact. Our marketplace is designed not to chase speculative gains but to maintain consistent quality and curation, even in volatile times. Yes, we’re able to answer questions about ROI (our co-founder Chingyi is an art broker), but expect us to be more forthcoming in our answers to questions about the artworks and the private collectors themselves.
The current downturn reinforces our mission. This is a moment for the art world, and everyone else interested in it, to rethink and recalibrate their relationship with art. Personalised and nuanced appreciation must replace the previous market’s fixation on monetary returns. It is also in such times of change, that we’re motivated to push ourselves ahead of the pack, as Larry Gagosian [5] famously did in the 80s when he leveraged the post-war art market boom and rode the surge in demand for contemporary art (the boom at that time lasted longer, and tapered off far more gently).
As we move forward, Art Again stands as a truly sustainable marketplace—one that’s built not on fluctuating profits but on the enduring emotional and cultural resonance of art itself. This ethos is what keeps us steadfast and resilient amid changing market conditions.
Unknown Artist, Untitled (Saigon Landscape I), 2003
A work by an unknown artist. Would you buy it simply because you like it?
[1] Some hard numbers crunched by Artnet set out in pg 5 of their mid-year review, accessible here.
[2] Read The Art Newspaper’s “How auction houses became the big winners of the pandemic" here.
[3] Page 21 of the mid-year review accessible here.
[4] Masterworks claims that Contemporary Art has appreciated at a Compound Annual Growth Rate (CAGR) of 11.3% from 1995 to 2023, outperforming the S&P 500’s 9.6%. However, this statistic can be misleading because the art market is notoriously dominated by a few high-value transactions, creating a skewed perspective of growth and of your ability to actually benefit from its returns. Additionally, the growth of Contemporary Art can be attested to the fact that, well, it coincides with the contemporary period itself. It is understated how art in other categories perform.
[5] Larry Gagosian is a well known American art dealer. In the 1970s to 1980s, he capitalised on the post-war contemporary art boom by transforming his gallery into an international powerhouse, through securing relationships with high-profile artists like Jean-Michel Basquiat and Andy Warhol, building a powerful network of collectors and investors, and blending art, commerce, and celebrity culture to align with the art world’s expanding global financialisation. Read more about it here.
Written by Milon
Art Again © 2024