in other words

New Buyers Prove Art Market Resiliency and More Key Insights

By Michael L. Klein

W e are about to embark on an autumn auction season, after seven months of sales conducted during the worst health crisis since the 1918 flu pandemic. It seems a good time to look back, using data from Sotheby’s proprietary Sotheby’s Mei Moses (SMM) Indices, which measure art market price levels using repeat auction sales.

Rembrandt's Self-portrait of the artist, half-length, wearing a ruff and a black hat, 1632. Sold for $18,722,168 in 2020. last sold at auction for $1,560 in 1970. A TOTAL GROWTH OF 12,000x, or 20.4% annually. (Photo by Tristan Fewings/Getty Images for Sotheby's)

Resiliency in 2020

JEAN DUBUFFET, LA VILLA III, 1966. Sold for $59,651 in 2020. last sold at auction for $25,000 in 2014. A TOTAL GROWTH OF 139%, or 17.1% annually.

In spite of the economic headwinds from Covid-19, the SMM All Art Index shows the underlying resiliency of the art market. It rose by 1.6% between 2019/20, which means that a work of art would have on average been worth 1.6% more at auction this year than last.

Sotheby’s also saw a continued broadening of participation in art auctions, with a 2.3% increase in the number of bidders participating in an auction in the first seven months of 2020 (2020 H1+) compared with the same period in 2019. These findings are particularly striking given the overall decrease in the number of works sold and the reduction in the amount of money spent at Sotheby’s, Christie’s and Phillips over the same time period. The increase in bidder numbers further shows how the art market has remained strong despite the obstacles and challenges presented by the global pandemic.

Reversing the 2019 trendline


Before the global lockdown, a number of important trends from 2019 set the stage for 2020. As my analysis for In Other Words in April 2020 noted, the art market contracted in 2019, compared with 2018. The SMM All Art Index measured a 5.9% decrease in 2019 prices compared with 2018, contributing to a contraction in aggregate sales by 5.2% to $64.1 billion, according to The Art Market 2020, published by Art Basel and UBS.

The art market often lags behind the equity markets. With S&P 500 Total Return Index up a massive 34% during 2019, many expected a 2020 rebound even before the pandemic set in.

Supply of art down more than demand

A MAGNIFICENT AND HIGHLY IMPORTANT YANGCAI RETICULATED VASE, SEAL MARK AND PERIOD OF QIANLONG. Sold for $9,084,486 in 2020. last sold at auction for $225 in 1954. A TOTAL GROWTH OF 40,400x, or 17.3% annually.

With many big auctions delayed, it is not a surprise that the first seven months of 2020 saw a decrease in the amount of total sale value, the number of lots sold, and the proportion of high-value lots offered, compared with 2019 H1+. Sales were rescheduled as late as July at Sotheby’s, Christie’s and Phillips, and aggregate auction sales were down 43% at the three auction houses. Art sales totaled $3.5 billion in 2020 H1+ compared with $6 billion in the same period of 2019. There were 25% fewer lots offered – 44,743 in 2020 compared with 59,334 in 2019 – while the average price of lots sold fell 24% to $77,338 from $101,126. The lower number of works offered were spread over a nearly identical number of sales.

A major factor explaining why aggregate sale value fell more steeply than the number of lots sold was the change in the mix of works offered. Though the total number of works sold was down 25% from 2019 H1+, works sold under $100,000 dropped only 23% while each value band over $100,000 dropped by between 39% and 48%, with the largest decline in the $1 million to $5 million band. Aggregate sale totals at the leading auction houses are heavily influenced by the most expensive works, and with proportionally fewer available this season. Given the SMM All Art Index was up by 1.6%, the larger drop in aggregate sales relative to lots offered says more about a change in supply than in demand.

Online auctions explode

At the height of the pandemic it was impossible to conduct traditional auctions with bidders in the room. Auction houses shifted their live sales to digital and created new kinds of web-only formats to drive a much larger portion of sales online. Though online sale channels were growing before the pandemic, digital-only auctions boomed in 2020. During 2020 H1+, sales totaling $444 million were made via online auctions at Sotheby’s, Christie’s and Phillips, a record-breaking 388% increase from $91m in 2019 H1+. This accounted for 13% of aggregate sales in 2020 H1+ compared with a meager 1.5% in 2019 H1+.

The average value of lots sold via online auction more than doubled, up by 125% from $8,749 in 2019 H1+ to $19,650 in 2020 H1+. This change is more notable given the 25% drop in average sale prices for all auction channels. By volume, there was a 117% increase, with 22,253 lots sold in 2020 H1+ compared with 10,397 lots sold in 2019 H1+. This represents 51% of all lots sold in 2020 H1+, compared with only 18% of lots sold in 2019 H1+.

Online sales accounted for 66% of all sales in 2020 H1+ compared with 27% in 2019 H1+. This was driven by the auction houses holding many smaller, thematically curated sales online.

LIU YE, WIE GEMALT, 1993. Sold for $1,719,325 in 2020. last sold at auction for $87,564 in 2012. A TOTAL GROWTH OF 1,864%, or 42% annually.

Millennials become art buyers


With a 25% decrease in the number of works sold, were fewer people bidding? Since data for Sotheby’s, Christies and Phillips are not publicly available, we use Sotheby’s exclusive bidder information to explore key trends. Overall, Sotheby’s saw a 2.3% increase in the number of bidders in 2020 H1+ compared with the same period in 2019.

Demographically, there was a notable shift to include more millennial bidders (born between 1981 and 1996). There was a 22.5% increase in bidders in their 20s and 30s. Geographically, the largest increase in bidders came from North America (up 11%) and from the Middle East and North Africa (up 17%). Though the amounts they bid were lower, given the lower aggregate sales, it is noteworthy that more bidders were able to participate in what are now global events.

Much of the bidding was, unsurprisingly, driven via online sales: 69% of all bidders in 2020 H1+ at Sotheby’s bid on a lot in an online auction, compared with just 30% of bidders in 2019 H1+. Many more were new bidders: 34.7% of all bidders at Sotheby’s participated with the auction house for the first time. There were 16.9% more first-time bidder in 2020 H1+ than 2019 H1+, and 70% of these new bidders bid on a lot sold in an online auction.

FERNANDO BOTERO, PORTRAIT OF A SCHOOLGIRL, 1967. Sold for $175,000 in 2020. last sold at auction for $93,750 in 2016. A TOTAL GROWTH OF 87%, or 19.5% annually.

Contemporary art prices drive market resiliency


Sotheby’s Mei Moses Indices reveal several interesting trends that add nuance to these findings. In addition to the SMM All Art Index increasing 1.6% in 2020 H1+ from 2019, the SMM Contemporary Art Index was up 5.5%, as demand for contemporary art continues to grow. The indices for Impressionist and Modern Art and for Old Masters and 19th Century art were both relatively even compared with 2019 price levels, with the former up 0.6% and the latter down 0.7%.

One way we can separate the data is by the price percentile of the earlier purchase: $5,000 for a work today is very different from $5,000 for a work 70 years ago, so this method allows us to scale value-bands over time. The top 5% of the market and the bottom 25% saw the greatest price increases this year, while the middle market slightly decreased. This suggests that the marquee live-streamed evening sales and the lower-value online-only sales have both had a positive effect on demand.

Though the art market is unique unto itself, it is interesting to compare it against other asset classes during the period. The S&P 500 Total Return Index, despite a substantial drop in March at the beginning of the lockdown, ended the first seven months on a positive note: up 2.4% in July compared with its close at the end of December. The Case-Shiller National Home Price Index, on which the Sotheby’s Mei Moses methodology is based, was up 2.1% through to the end of this June relative to December. Notably, the price of gold was up a substantial 29.2% as of July 31 from the end of 2019, given global fears and speculation.

Banner: SANYU, QUATRE NUS, 1950. SOLD FOR $33,333,739 IN 2020. LAST SOLD AT AUCTION FOR $2,109,878 IN 2005. A TOTAL GROWTH OF 1480%, OR 20.2% YEARLY.

in other words: September Issue

Stay informed with Sotheby’s top stories, videos & news.
Receive the best from Sotheby’s delivered to your inbox.

By subscribing you are agreeing to Sotheby’s Privacy Policy. You can unsubscribe from Sotheby’s emails at any time by clicking the “Manage your Subscriptions” link in any of your emails.

More from Sotheby's

Close