The financial crisis that started in 2008 has returned to haunt the art market once again, just when a run of good auction results was reassuring collectors and investors (the contemporary sales in London in June raised £200m over three evenings alone). July’s most recent ArtTactic US & European Confidence Indicator (a proprietary index that every six months polls a sample of 130 key international collectors, curators, auction houses, dealers and art advisers) saw an 8.3% increase in the first six months of 2011, the fifth consecutive rise from its low in November 2008. At the same time, those polled showed a strong divergence between their outlook for the wider economy and for the art market, a trend similar to what we saw in November 2007 and May 2008.

But does this divergence mean art experts are in denial, or that art is increasingly being perceived as a safe asset in an otherwise risky world? Or are we in a market scenario like that of autumn 2007, when the art market steamed ahead for another 12 months despite the brewing banking crises and the collapse of British bank Northern Rock? As in 2007, we might not yet have seen the true extent of the iceberg that we are about to crash into.

Same difference?

So what has happened to the art market since Lehman Brothers was declared bankrupt in September 2008? The downturn had an immediate impact on auction turnover, which dropped 81% between May 2008 and May 2009. The auction prices of the market’s previous favourites—such as Damien Hirst, Jeff Koons and Takashi Murakami—came under severe pressure in the months that followed, with certain works dropping more than 50% in value.

For the more established post-war artists, such as Andy Warhol, the downturn was short-lived, however. In November 2009, one of Warhol’s serial compositions, 200 One Dollar Bills, 1962, achieved $39m (excluding buyer’s premium) against a pre-sale estimate of $8m to $12m, and the following 12 months proved to be one of the best years in the Warhol market’s history. The success of the Yves Saint Laurent sale in February 2009 also showed that high-end works with exceptional provenance were still in great demand despite the financial turmoil.