Global Art Prices

Artprice reports that the art market was bound to be affected by the turbulence seen in international stock markets this first quarter. As the impact of the subprime crisis rippled out through financial systems and the international economy, seven years of soaring gains in the price of artworks were brought to an abrupt halt. For the first time since the twin towers attack of 11 September 2001, the art market has been showing signs of a fall. According to the International Monetary fund, the financial crisis will cost close to USD 1 trillion. The IMF goes on to explain in its latest Global Financial Stability Report that the crisis has now spread beyond the US subprime market and, specifically, is now impacting the leading markets for office and residential property, consumer credit and corporate debt. In this environment, nobody doubts that the Fine Art auction market, too, is starting to reflect the gathering gloom felt by investors the world over. In the first quarter of 2008, international art prices were 7.5% below those recorded in the last quarter of 2007. That said, because of the incredible 18% rise in 2007, this still left prices at 1 April 2008, 13% above those seen 12 months previously. As prices have fallen, so we have also seen an 18% reduction in the number of sales at auction compared to 2007. But tight supply has kept bought-in ratios relatively steady, at close to 35% in the first three months of the year. By taking a prudent line, setting realistic reserve and estimated prices, sellers and auction houses have been able to find buyers for 65% of lots on the stands. 
With the steep decline in the dollar, Europe felt the full force of the slump, and prices were down by 9% over the quarter. Art prices in the euro zone have slipped back to their year-ago levels, wiping out in three months a whole year of euphoric gains in 2007. The uptrend in volumes on the European art market, meanwhile, looks to have stopped dead in its tracks. 
In the USA, the Fed has been trying to stave off recession by one drastic rate cut after another, taking its Funds rate down from 5.25% in September 2007 to 2.25% by March this year. The impact of the financial crisis on the US art market may not become apparent for another month, when we see what happens at Christie’s and Sotheby’s prestigious Contemporary Art sales, scheduled for 13 and 14 May in New York. The weakening greenback and galloping inflation could actually give a short-term boost to auctions bid in dollars. To join ArtPrice go to http://www.IrishArt.com and look for the ArtPrice logo at the bottom of the Home Page. Key in any artist to check prices and join. (For full source and full article click the Headline). Irish Art