The Contemporary Art Market’s Secondary Sales Sector is Struggling. Here’s Why.

The contemporary art market is currently wrestling with unprecedented challenges due to market saturation and rampant speculation. A glut has diluted demand and forced resale values down. Speculators who once propelled market growth through quick resales now contribute to this instability. As a result, collectors are flooding the secondary market with pieces that fail to reach or exceed their original purchase prices. This vicious cycle of excess supply and speculative behavior undermines market confidence and leaves the secondary sales sector struggling to regain its footing. Whether you’re a collector, an artist, or a curious spectator, read on to learn all about the secondary sales climate in 2024.

First, What is the Secondary Art Market?

When we say the “secondary market,” we mean the resale of works that have already been sold at least once before. Unlike the primary market where art is sold directly by the artist or through their representing gallery, the secondary market involves transactions between collectors, dealers, and auction houses. For example, major auction houses like Sotheby’s and Christie’s facilitate high-profile sales and provide a transparent platform for buyers and sellers to engage.

Secondary sales prices are often seen as a measure of an artwork’s long-term value and desirability. After all, prices can fluctuate based on demand, which in turn depends on the artist’s reputation, the rarity of the work, and current market trends. It’s important for collectors and investors to understand the secondary market in order to make informed purchasing decisions and accurately assess the potential return on investment for their art collections.

Factors Influencing the Secondary Art Market

The dynamics of the secondary market are influenced by various factors, including the provenance of the artwork, its condition, and historical significance. Provenance—or the documented history of an artwork’s ownership—can significantly impact its value.

Pieces with notable past owners or exhibition histories are usually more sought after—though not always. A painting by a prominent artist that has never reached the auction block before can command lots of buyer attention and high sales prices.

How Are Secondary Sales Prices and Auction Minimums Set?

The primary and secondary art markets differ significantly in terms of pricing mechanisms and influences. In the primary market, prices are typically set by the artist or their representing gallery—often based on factors such as the artist’s career stage, demand for their work, and production costs. These prices are relatively stable and controlled to establish the artist’s market presence and value.

In contrast, the secondary market’s pricing is more dynamic and influenced by market demand, historical performance, and competitive bidding. Here, prices can fluctuate wildly, with artworks sometimes fetching far higher prices than their initial sale due to factors like the artist’s increased fame, rarity of the piece, and its provenance. This volatility in the secondary market reflects the speculative and investment-driven nature of art collecting.

Is the Contemporary Art Market Failing—or Adapting?

Recent secondary sales prices have led many collectors and gallerists to wonder whether the contemporary art market is in a permanent downward spiral or a temporary adjustment period. According to Katya Kazakina in a recent article for Artnet, “‘Many things are not selling at all or selling for a fraction of what they used to.’” Is it economic uncertainty, shifting buyer preferences, or a natural market correction? Could the slowdown be a combination of all three? Let’s take a look.

Economic Uncertainty

High interest rates, inflation, and geopolitical instability have made high-net-worth individuals more cautious about their investments—including art. This has stunted demand for high-priced artworks—particularly speculative pieces.

According to KPMG, persistent geopolitical tensions like those stemming from the Russia-Ukraine conflict and broader global instabilities have impacted the overall economic outlook.​ This environment has made many investors more conservative in their spending.

The World Economic Forum’s reports indicate that global economic conditions are expected to remain uncertain throughout 2024, with significant geopolitical and economic risks influencing market behaviors. Its Q1 report found that “Just over half of chief economists anticipate the global economy to weaken this year.” This has translated into a more cautious approach by high-net-worth individuals towards art investments, particularly those in the higher price brackets.

Shifting Tastes

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Over the last couple of years, there has also been a notable shift in collector preferences with a growing interest in older, established artists and a slight cooling off in the ultra-contemporary segment. This has affected the prices and demand for works by younger, emerging artists who benefitted from an upswing during the COVID-19 pandemic. For example, the market remains strong for Modern art like the 1960 piece by Kenojuak Ashevak pictured above.

Many art market experts have observed this shift. In an interview with Artsy‘s Maxwell Rabb, Salomé Limbach-Dumas—co-founder of Parisian gallery Dumas Limbach—noted a genuine interest among collectors in established artists who have been recognized for many years. She highlighted that collectors—especially new ones—tend to gravitate toward “sure values” when starting their collections, focusing on well-known and established artists​​.

The secondary market has also experienced a pivot towards higher-value transactions and a focus on the personal enjoyment of art rather than speculative buys. This shift toward quality and longevity indicates a more discerning approach among collectors​.

Market Correction

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As Robert Frank writes in a CNBC article from May 2024, auction results have slipped after their “Post-Covid peak, when cheap money, a booming stock market and fiscal stimulus saw record sales.” Following a period of rapid growth and speculation—particularly in the digital art market (think NFTs and AI art)—there has been a natural market correction in secondary sales. This correction has resulted in more realistic pricing and a focus on quality and long-term value rather than short-term hype.

In 2023, the art market experienced a decline in overall sales value but saw an increase in the number of lots sold, which indicates a shift towards more affordable and realistically priced artworks. Market analysts and auctioneers expect this trend to continue into 2025.

Economic Factors

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Of course, we can’t ignore the volatility and global economic crisis in which the world was embroiled during and after the COVID-19 pandemic. As Andrea Danese writes in an article for Artsy, “The art market rises and falls in line with the economy.” Global economic downturns and instability significantly impact art sales, as the art market is highly sensitive to broader economic trends. During periods of economic recession, discretionary spending typically declines, and luxury goods often see reduced demand. That includes fine art.

Collectors often hesitate to make major purchases, and auction bidding activity declines. Historical data shows that art sales can contract during financial crises, as seen during the 2008 global financial crisis when the art market experienced a sharp decline. Conversely, the art market often flourishes during periods of economic prosperity. Then, increased purchasing power leading to higher sales volumes and record-setting auction prices.

What About Currency Fluctuations and Instability?

Currency exchange rates also impact international art sales. When the currency of a major art market like he US dollar or the Euro strengthens, artworks priced in those currencies become more expensive for foreign buyers. This can reduce international demand.

On the other hand, a weaker currency can make a market more attractive to international collectors. Currency fluctuations can also affect market confidence, as rapid or unpredictable changes can introduce uncertainty and make buyers more cautious. Art dealers and auction houses monitor currency trends closely to strategize pricing and marketing for international audiences. In doing so, they hope to mitigate the adverse effects of exchange rate volatility.

Investment Shifts During Recession

In times of economic uncertainty or low confidence in the art market, investors often shift their focus towards more stable and lucrative assets like stocks, bonds, or real estate. This diversion of funds can impact the liquidity and value of art investments.

While art is considered a fairly reliable alternative investment, it is less liquid and can carry higher transaction costs compared to traditional financial assets. As a result, investors may prefer assets with more predictable returns and lower risks during a recession or depression. This shift can suppress art prices and reduce the volume of high-value transactions.

Final Thoughts on the Secondary Market for Contemporary Art

Despite the many challenges outlined above, the contemporary art market is still dynamic and resilient. It’s undergoing a period of adjustment and adaptation after shocking sales after the COVID-19 Pandemic. Investors have returned their attention to quality, diversity, and long-term value. How do you time investments in the secondary art market? Are you confident about its recovery? Let us know in the comments below.