Small but mighty: sales under $10,000 defy market

Could it be a hangover from lockdown binges? The prospect of increased asset taxes? A need to extract cash? Rising storage costs? Perhaps all of the above? Whatever the reason, while the masterpiece market struggles for supply, auction sales of art worth under $10,000 are “booming”, according to the sales data firm Artprice.

According to its data, a huge 91% of art offered at auction worldwide in the first half of 2024 sold for less than $10,000—the fastest growing sector of the market, more than doubling in volume in a decade. Two years ago, according to a recent Artprice report, 89% of all lots offered sold for under $10,000. This small 2% growth “actually represents an additional 30,000 artworks”. Artprice dates this boom back to the “digital fluidification” of the market during the Covid-19 pandemic, which benefited the affordable sector in particular. Of the 343,000 lots sold for under $10,000 in the first half of 2024, “61% fetched under $1,000, with an additional 30% fetching between $1,000 and $10,000”, the report says.

Paris at the heart of the boom

With its glut of small auction houses, Paris is the epicentre of this affordable boom, with Artprice calculating that in the first half of this year alone, 30,369 lots were sold there for under $10,000, making a total of $42.2m. That is three times the volume sold in this price bracket in New York and more than London, Berlin and Tokyo put together.

Artprice’s findings are echoed by other analysts. In the Art Basel and UBS Art Market Report 2024, the economist Clare McAndrew writes that nearly all segments “fell or stagnated in terms of the number of transactions in 2023, with the biggest drop [40%] at the ultra-high end [over $10m]”. However, the “low end”, defined as up to $50,000, “went against the declining trend, posting modest growth of 2%”, which helped to maintain the volume of sales overall given that this segment accounts for over 90% of transactions.

This buoyancy at lower levels, McAndrew says, represents a “distinct reversal” of the trend seen in 2021 and 2022, when growth and post-Covid recovery was only seen in the $10m-plus category.

The major international auction houses (Bonhams, Christie’s, Sotheby’s and Phillips) now hold more than five times as many online-only sales as they did in 2019, “accounting for 63% of their total sales, while the number of live sales has fallen by just over 20%”, McAndrew writes.

“Expanding the base of the market is what we’ve been saying needs to happen for years,” McAndrew tells The Art Newspaper. “It is healthy for the art market; it could make it more stable, more democratic, less focused on the high end. It’s a way of attracting new, younger buyers in, and that is what we desperately need. But because the top end is flat, people interpret it as a weak market.”

India Phillips, the managing director of Bonhams UK, also recognises this trend and says globally 70% of its sales are now online only. This shift, she continues, has helped the business cope with a glut of low- to mid-value consignments over the past 12 months; in 2023, the auction house offered for sale 120,530 lots, of which 89,831 were sold for under $100,000, and in the first half of 2024, 40,465 of the total 53,260 lots offered were sold for under $100,000.

The biggest upticks in the sub-$100,000 category was seen in Asian art, antiquities, arms and armour, jewellery, wine, prints and handbags. Phillips thinks that Bonhams’s grounding in the lower and middle market has resulted in a “much less aggressive downturn in our numbers than, say, Christie’s, Sotheby’s and Phillips, which I think is directly linked to the fact we’re selling across a huge number of categories and value bands”.

Tax fears driving consignments

In the UK, the fear of capital gains tax (CGT) being raised in line with income tax also contributed to a rush of goods being consigned to auction in the first half of 2024, particularly collectibles and decorative arts (although, in the end, the new Labour government’s October budget only raised the levy from 20% to 24% for higher rate payers). “Earlier in the year, when CGT rises were being touted if Labour got into government, it prompted a lot of people to sell,” Phillips says. “Once Labour were in power, over the summer we saw increasing consignments from people concerned about the predicted increase.”

Sell-through rates and the hammer price to low estimate ratio have remained healthy, but only through lowering estimates. “We saw huge buyer demand in the first half of last year and were consigning in line with those tailwinds,” Phillips says. “Fast forward to the middle of November, and the market contracted very quickly in certain areas and prices dropped. This year we’ve seen the positive impact of our specialists reacting quickly to new levels of the market and adjusting estimates.”

ArtTactic’s auction data show a marked rise in art (from Old Master to contemporary) sold for under $50,000. In 2023, 13,572 lots were sold in this bracket across Christie’s, Sotheby’s and Phillips, for a total of $167.5m, the highest total ever. And for the first half of 2024, these numbers are up again, year-on-year—7,158 lots were sold under $50,000 for a combined $86.9m.

“In terms of rates of return, art is a pretty terrible investment and the rising holding costs—storage, insurance, shipping, conservation—can all of a sudden add up to a double-digit percentage of its value,” says Lindsay Dewar, the chief operating officer and head of analytics at ArtTactic. “That, combined with higher interest rates and geopolitical tensions, means some people are wanting to become more liquid by selling off their art.”

The rule of thumb for successful investment in art is to “buy expensive and hold long”, Dewar says—quite the reverse strategy to some who were frothing the young contemporary market in 2021-22 but now find themselves offloading impulse buys.

“If you look at the exponential growth of art fairs, and the number of artists and galleries participating in the primary market over the last ten to 15 years, it stands to reason that there would be a lot of growth at the lower end of the auction market, too, hence a proliferation of online, mid-season and day sales,” says the New York-based adviser Alex Glauber, the president of the Association of Professional Art Advisors. He sees the current growth of the sub-$100,000 auction market as an inevitable consequence of lockdown buying sprees: “I think a lot of it is just a hangover from the fact that people have been consuming at such velocity for a few years, so it’s only natural that they are now editing their collection, freeing up resources.”

The primary market, Glauber says, has also got very expensive. “The run up of prices coming out of Covid and the momentum of speculation has been a part of that, but the bigger story is that the structural and fixed costs of running a gallery and being an artist are much higher.” Therefore, for those committed enough to follow day and online sales closely, there is value to be had. “There are often things that a couple of years ago would have been in the six figures that are now available to purchase at auction at, say, 60 cents on the dollar. So, your buying power in many cases is stronger at auction than in galleries.”

That, he thinks, has a lot to do with the “structural inefficiencies” of the art market; if you buy from a gallery, you either agree, in isolation, to pay a price or you do not, whereas at auction, “you need at least two really committed bidders to compete to raise that price up to a level that’s commensurate with the primary market. The whole auction system is biased downwards, so it’s hard to create parity.”

With the huge number of artists working today, and therefore the amount of work coming onto the primary market increasing exponentially, this flood of supply is unlikely to abate any time soon.