Is the art bubble about to pop?

We’re all aware of the sky-high prices many artworks can now command – but as top auction houses fail to shift apparently fail-safe bets, boom could be turning to bust, says Jody Clarke.

Van Gogh sold just one painting in his entire life. And it seems the market for the Dutch artist may have dried up again. His Wheat Fields, along with another quarter of the lots on sale at Sotheby's (BID) impressionist and modern art auction in New York last week, refused to budge, costing the auction house which had guaranteed prices to some sellers more than $14m. Its share price fell 36% as investors feared the art bubble was bursting after eight years of non-stop price rises.

As an indication of where the art market is headed, Sotheby's share price is as good a guide as any. It peaked in 1989 before collapsing the following year, along with the rest of the market. And with contemporary art prices up 55% and modern art 44% this year alone, long-time art buyers, with one eye on the credit squeeze, have decided they've had enough. "A lot of traditional buyers... are looking at these kind of prices... and thinking to themselves let's just hang on here, we're not going to get involved in this'," says Michael Benson, director of Candlestar, a London-based dealer.

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Jody Clarke

Jody studied at the University of Limerick and was a senior writer for MoneyWeek. Jody is experienced in interviewing, for example digging into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.