Will the art market comes to its senses in 2019?

Just as the murmurs anticipating a weakening in the contemporary art market gained momentum in the wake of the New York sales in November, sell-out stands reported at Art Basel Miami Beach seemed to demonstrate that buyers are as keen as ever. It is possible that this particular bubble may never burst: there is just too much vested interest – that is, invested billions – to allow it to happen. Even so, it does seem that this past year a critical line has been crossed that endangers the uneasy equilibrium of the global art market.

At its headiest heights, this market has long been a world of smoke and mirrors but it has been brilliantly and professionally managed. Today it more closely resembles the Wild West. Calling the shots are the vendors and those who make a killing by providing auction houses with third-party guarantees. These underwrite the sale of individual works of art by ensuring the vendor a minimum price but they also give the guarantor a percentage of the upside if the work sells for more. It is not uncommon for collectors to threaten not to bid on a lot unless they can also guarantee it, and the contagion has spread to have a significant impact on even the most traditional of markets. So much for the auction houses’ always precarious profit margins (despite the dramatic culls of recent years, more staff losses have just been announced).

The result of third-party guarantees is that works of art come to auction with estimates that bear no relation to an artist’s established market value – there were countless examples in November of works offered at four or five times previous auction highs. The most extreme case of hyperinflation was David Hockney’s Portrait of an Artist (Pool with Two Figures). The previous auction record for Hockney stood at $28.5m but a figure of $80m was plucked out of the air for this particular canvas. The consignment was intended to tempt Paul Allen, the co-founder of Microsoft, who had never hidden the fact that he had always wanted the painting, but he died shortly before the auction took place. What kind of financial deal lay behind this particular sale is anyone’s guess, but these bars are arbitrarily set and auction-house employees have to scrabble around to find people prepared to jump over them. The increasing number of works that sell on a single bid, or even a second bid, suggests how strained and unhealthy – and ultimately dreary – this situation is becoming.

It is a state of affairs that makes most stalwart collectors feel quite ill, and it is unlikely that new clients – many speculators themselves – enticed into this game feel any better when they discover what their trophies are worth after attempting to sell them on. It is tempting to see the disastrous auction results witnessed in mainland China this year as a backlash from clients who had had enough of being duped.

On a more positive note, it is heartening to see the founders of the Taipei Dangdai fair, its first edition scheduled to take place from 18–20 January 2019, eschew the model of the big branded international fair to create something gentler and specifically tailored to the region. Similarly, the buzzing first edition of the Fine Arts Paris in November unashamedly focused on the long-neglected middle market – of Old Master paintings, drawings and sculpture – and people who simply want to live with beautiful things. Will 2019 prove a year of more quiet rebellion?