The global art market, which heated up during the pandemic, has entered a deep freeze. As big-spending collectors close their wallets amid high interest rates and geopolitical uncertainty, the market is rapidly icing over. Even famous New York galleries are closing one after another because they cannot afford the rent, and major art fairs have canceled this year's events.
On the 10th, according to Artnet, which holds the world's largest art auction data, first-half fine art auction sales this year reached $4.72 billion (about 6.55 trillion won). That is a sharp 40.9% plunge compared with the first half of 2022, when the market was at its peak.
The auction slump is not a temporary wobble. On an annual tally, the global art market began to clearly shrink in size starting last year. According to the Art Basel and UBS report, which the art industry effectively treats as a benchmark, total global art market sales last year were $57.5 billion (about 79 trillion won), down 12% from the previous year. The auction market, where expensive works are concentrated, was hit particularly hard. Public auction sales in 2024 plunged 25%. Transactions of ultra-high-priced works exceeding $10 million (about 1.38 billion won) shrank 45%, nearly halving. A $70 million Giacometti sculpture failed to sell, and a $30 million Andy Warhol work was withdrawn just before auction.
Famous New York galleries in the United States, which function like capillaries in the art market, are being pushed into successive closures. The United States accounts for 43% of global art market transaction value. With world-class collectors and related advisory, media, and finance clustered together, prices and trends form there first.
Venus Over Manhattan, a renowned New York gallery that has featured famous artists such as Jeff Koons and Murakami Takashi, announced in July that it would close, the first among major galleries. Afterward, Clearing, which had earned a reputation for discovering emerging artists, shut its doors on the 7th of last month. Kasmin, one of the influential powerhouse galleries, also decided to operate only until this fall. In the case of Clearing, its reputation was strong enough to secure a spot in Art Basel's main show, but it ultimately chose bankruptcy because it could not bear fixed costs of $150,000 (about 200 million won) per month. In an interview with Artnet, representative Babin said, "We tried our best, but the hole we were standing in was too deep." Even The Art Show by the Art Dealers Association of America (ADAA), a fair representing New York, canceled this year's event.
The apparent reason the art market has frozen is that the wealthy who accumulate art closed their wallets due to macroeconomic uncertainties such as inflation. The art market has a strong character as a coincident indicator that moves with the economy. During the 2009 financial crisis, art market sales plunged 36% in just one year. Drew Watson, head of Bank of America Art Services, said in an interview, "The art market overheated along with the stock market after the pandemic," adding, "Low interest rates channeled liquidity into art, but the situation has now changed."
Speculative money that entered the market during the pandemic aiming for "flipping" has ebbed away like the tide, negatively affecting the art market across the board. The Art Newspaper, an arts magazine, noted, "There was a time during the pandemic when buying art was a good transaction and investment, but that narrative has ended." Galleries raised prices excessively to match the overheated demand at the time. Works by U.S.-born artist Shara Hughes sold for up to $500,000 at galleries as recently as two years ago. The artist's top auction price this year is $310,000. In the art market, galleries are considered the primary market and auctions the secondary market. Collectors buy works by artists they like at galleries and hold them; when the artist's recognition and the work's value rise, they sell at auction. However, as gallery prices jumped excessively, auction prices falling short of gallery prices—a price inversion—has become frequent this year.
Collectors' spending behavior is also changing rapidly. The core collector base that has led the market for decades is gradually aging. By contrast, younger generations tend to spend more on "experiences" than on "ownership" such as artworks. Beth Rudin DeWoody, a prominent collector who has amassed more than 10,000 works over 50 years, told Artnet, "The art market has been a little crazy on prices," adding, "I will be cautious about collecting for the time being." Another well-known collector, Stephanie Champagne, said she has stopped buying for now due to market oversaturation, saying, "Too many works are flooding out."
Art is an illiquid asset that cannot be sold immediately like stocks. Price swings are large, and because expectations about artists strongly influence prices, industry networks still have a big impact on price formation. Experts pointed out that distrust of the sharp price increases during the pandemic is now showing up as price declines. In other words, brand, scarcity, and connections still artificially create the value of works.
Belgian art expert Alain Servais said in this year's industry report that "the art market slump is not simply due to cyclical trends but is structural." He said, "The oversized infrastructure—too many galleries, artists, and events—needs to be reduced," adding, "There will be blood on the streets until the art market finds a new equilibrium."