After experiencing two years of expansion, sales in the art market decelerated in 2023. Factors such as rising interest rates, persistent inflation, geopolitical conflicts, and uncertainty in global politics contributed to a more discerning and cautious approach among high-end buyers. This segment had been crucial in driving sales recovery following the COVID-19 pandemic in 2021 and 2022. Although some of the largest markets showed varied performance, overall global sales declined by 4% compared to the previous year, estimated at approximately $65 billion, marking a more stabilised trend amid the challenges.
Art Market Rebounds Strongly Post-Pandemic, Surpassing Pre-Crisis Levels in 2021
In the unprecedented challenges of the global pandemic in 2020, global sales of art and antiques plummeted by 22% to $50.3 billion, marking the lowest point since the 2009 global financial crisis. However, the market swiftly rebounded in 2021 driven by robust demand post-lockdown, the resurgence of live exhibitions, and ample supply in the high-end sector. By the close of 2021, sales surged to $65.9 billion, a remarkable 31% increase year-on-year, surpassing pre-pandemic levels of 2019. Throughout 2022, growth persisted but at a more moderate and uneven pace as regional disparities and market segments began to diverge. The US market led major markets with strong recovery, contrasting sharply with China where prolonged lockdowns hindered sales, acting as a setback to global growth. Notably, the highest echelons of the market drove growth with numerous record-breaking sales, while other segments remained stagnant or declined.
Global Art Market Shifts in 2023: US and UK Sales Stall, China Sees Upsurge
In 2023, there were significant shifts in key trends. Sales decelerated notably in the US and UK markets, which host some of the world’s highest-priced sales, thereby impeding overall growth. In contrast, China emerged as a standout with increased value, driven by the clearance of inventories from cancelled sales in the autumn 2022 auction season, attracting eager post-lockdown buyers in the first half of the year. Despite several multimillion-dollar sales worldwide, the high-end market showed subdued year-on-year growth in 2023, while lower-value sales demonstrated more positive performance across both auction and dealer sectors. Similar to 2022, differing regional and segmental performances tempered changes in sales figures, albeit with a reversal in direction compared to the previous year. Overall, although sales in 2023 dipped to a three-year low, market values remained 1% higher than pre-pandemic levels in 2019 ($64.4 billion).
Transaction Volume Surges Despite Market Value Decline
Despite a decline in market value, the volume of transactions showed robust year-on-year growth, reaching 39.4 million in 2023, marking a 4% increase from 2022. During the pandemic in 2020, transactions plummeted by an estimated 23% to 31.4 million, but rebounded strongly by 19% in 2021 and marginally by 1% in 2022, reaching 37.8 million. The notable uptick in 2023 was driven by sustained transaction activity at lower price points, appealing to both dealers and auction houses. This contrasts with previous slowdowns where fewer sales occurred, predominantly affecting lower-priced items as cautious buyers favoured higher-end purchases or sought perceived quality. In 2023, however, the data suggests continued buyer interest at lower price levels, while the high-end segment experienced a relative decline in transaction volumes.
Economic Instability Challenges Art Market Despite High-Net-Worth Resilience
Over the past two years, escalating inflation and economic uncertainties across various regions have constrained discretionary income and spending among collectors. Even high-net-worth (HNW) individuals, typically less affected by rising living costs, were cautious amid concerns about wealth preservation and economic stability. Social and political volatility further diverted attention from collecting pursuits.
The increase in interest rates in 2023 sparked debates about its impact on the art market. While some segments, less tied to financial markets, remained resilient to inflation and rate hikes, many HNW collectors, reliant on credit for acquisitions, felt the pinch of rising borrowing costs. Higher interest rates raised the opportunity cost of holding art, potentially deterring investments as returns on alternative investments became more attractive in real terms.
Art Trade Faces Uphill Battle Amid Economic Challenges
Inflation and rising interest rates posed significant challenges for participants in the art trade in 2023. Despite varying sales performances, feedback from market research, particularly within the dealer sector, indicated a notably tougher year due to escalating operating costs. Inflationary pressures impacted logistics, travel, rent, and other critical areas, squeezing profitability margins. Sales dynamics diverged between auction houses and dealers, encompassing both primary and secondary markets. In uncertain economic and political climates, private sales emerged as a preferred option for many sellers, shielding transaction details and demand levels from public scrutiny. This trend contrasts with buoyant markets where vendors often opt for public auctions in pursuit of potentially higher returns.
Art Market Faces Mixed Fortunes in 2023 with Declines in Auctions, Resilient Private Sales
During the pandemic in 2020, both dealer and public auction sales saw double-digit declines, although private sales by auction houses rose by over 40%. In 2021, as the market recovered and the outlook became more positive, sales advanced across the board, but auction sales showed the strongest increase year-on-year, advancing by just over 50% versus an uplift of less than half that amount for dealers (18%). In 2022, political and economic trends such as the war in Ukraine, rapidly increasing inflation rates, China’s COVID-19 lockdowns, and looming recessions in other major markets started to weigh on sentiment, and buying became somewhat thinner and focused on the high end, with wealthy buyers anchoring on works by the most established artists who they perceived were lower risk and greater stores of value. This sufficed to keep sales relatively stable, with growth in the dealer and private sectors offset by stagnation at public auctions, where the $10 million-plus segment was the only part of the market with a positive trajectory.
In 2023, both public auction and dealer sales decreased, although the decline in auctions was more severe, falling by 7% versus a 3% drop in dealer sales
In 2023, both public auction and dealer sales decreased, although once again, the decline in auctions was more severe, falling by 7% (versus a 3% drop in dealer sales) and saved from a deeper contraction through the injection of postponed 2022 sales in China early in the year. Private sales at auction houses went against the declining trend, increasing by 2% year-on-year.
Combining all sales of auction houses (both private and public), the auction sector accounted for 45% of sales by value, stable compared to 2022, while dealers and galleries (including all online and offline retail sales of art and antiques in the primary and secondary markets) were at 55%. As always, the division between public and private sales varied widely between different regions and sectors.
What Makes Grandma Moses’ Folk Art and Paintings So Beloved and Timeless?
