Author: Terry Ingram
Date published: 20 April, 2006

Terry Ingram wrote the weekly Saleroom column in the Australian Financial Review from March 1969 to March 2006. In this article he takes a gently satirical look at the diverse and often quirky factors which can have a bearing on the price someone is prepared to pay for a work of art.

If an advertisement for a new internet auction site is to be believed, the price of art – including that of artists whose careers have not yet been established – can be dictated by whether a potential buyer has had a refreshing bath or not. The advertisement, for a site called Saleroom managed by the London-based art and antiques trade magazine the Antiques Trades Gazette, showed a woman in a bath towel with a towel also wrapped around her head. She was shown as "one of our typical bidders."

A deluge of new buyers has poured into the world art markets over the past 10 years as art has taken off as an investment and a consumable. The market has been fired by property, hi-tech and financial booms, enormous salaries, general prosperity and frequently the lack of investment opportunities with cash on deposit offering little attraction. Art has frequently been what gamblers would term "the only wheel in town."

Due to heavy and skillful marketing by the big auction houses headed by Sotheby’s and Christie’s of the purchase of art as a do it yourself activity, many of these buyers have entered the art market through the salerooms. Most of the bids are now made by telephone - not just for privacy reasons but also for convenience in a busy world of counter attractions and business commitments - with also little knowledge of how the sale (and with it the Australian art market) is progressing.

From the prices paid, often well in excess of established gallery prices, many of the buyers also have no knowledge of set prices for an artist’s work or if they do have no regard for them. Competition – the buzz-word of the new global economy – is setting the values and the artists’ dealers have found that their traditional influence on their artists’ price structure has diminished.

A classic instance was the price paid for a Celia Perceval painting at an auction by Deutscher-Menzies in Sydney on December 7 last year. Picking Daffodils sold for between seven and eight times its estimate to make AUD$38,400 as two telephone bidders battled over the work. The price was double the artist's best gallery prices which were for far bigger works.

However, buyers who go to dealers are likely to find the cupboards bare and the market is being set by as few as two bidders who have possibly just the right space, pots of money and a carelessness about how they spend it and lots of determination to secure their latest trophy. Such is the demand now that art buyers often have to put down their names on waiting lists for many of the fashionable or otherwise desirable artists like property buyers purchasing from an architect's plan.

It does not matter, it seems, who you are. For at her opening of the Australian Pavilion at the Venice Biennale in 2005 the actor Cate Blanchett, a modestly serious art collector, said how much she would like to have a work by the Australian representative, Ricky Swallow, in her collection. However, she had not been able to locate one to buy.

The scenario was not entirely new, as anyone with memories of the Macquarie Galleries’ Sydney exhibitions of the 1960s will recall. The demand (which considerably outstripped supply) for works by Ian Fairweather was resolved by a queue which began in the day before the opening of the exhibition and grew overnight. Lately the excess demand has been resolved more discretely by waiting lists and pre-opening or even studio visits for favoured clients. This was one way the dealers could see serious collectors, rather than speculators cashing in at the auctions where competition rules, and some order could be maintained in careers which could otherwise take a roller coaster ride into chaos and possibly oblivion.

This has heightened the traditional problems of valuing art. With the lack of title deeds enhancing the appeal of art as a store of wealth, the transactions by which art is transferred via galleries and, to a lesser extent, auctions, are difficult to scrutinise. Often slippery values are set in a world of smoke and mirrors.

In a letter in the Mitchell Library to the Sydney art dealer William Gill from John Eldershaw from Richmond, Tasmania dated June 29, 1921, " I am in doubt as to the wisdom of your putting red stickers on unsold pictures and I should not have consented to it had I known at the time." The works might have sold had they been seen to be still available for sale, the artist argued. However, Gill clearly felt that the overall result would be better if the public could be led to believe that there had been a rush to buy the artist’s work.

The practice has undoubtedly continued. The international auction houses used to call out names of fake buyers and bidders’ numbers until New York State law was changed to require auctioneers to announce when lots were not sold. The purpose was to protect the value of the work in future negotiations for its sale. Its rejection, especially in the arena of a public auction, could be the kiss of death.

"Ramping"of an artist’s work at auction is still a possibility which even auctioneers would have difficulty in policing. A work is offered by a consignor with an interest in the oeuvre of the artist (the artist could be alive or dead) and then bid up by the consignor or associate prepared to wear the costs of the auctioneer’s commissions - even though these can be 20 per cent or more of the hammer price.

Art lends itself to such manipulation because its intrinsic value in its most common form as a piece of board or canvas with painting on it is minimal. Its potential value as a masterpiece can be untold millions of dollars.

Many diverse factors can have a bearing on the price someone is prepared to pay for a work of art. One of the doyens of the art trade, Barry Stern, told me that in summer Sydney went to the beach, concentrating the art market in winter. So paintings in warm colours, reds and browns, were the best sellers as art tended to be bought in winter. This may partially explain the success of Sotheby’s Aboriginal art sales which traditionally have been held in Melbourne in June or July. The warm ochres have glowed like an electric bar heater.

Green is said not to sell well. It is the colour of envy. But as the main colour of lush landscapes, it did not deter Eugene von Guerad’s patrons from commissioning his works or Lord Lloyd Webber from paying $1.98 million for his ‘View of Geelong’ in 1998. Blue is said to be the most popular colour and there is no doubt that Brett Whiteley’s inky blue Sydney Harbour views are the most popular, if not the most important, of the artist’s works.

Overseas landscapes by Australian artists were heavily discounted as inferior to local landscapes in the nationalistic 1980s. Abstract art has always been a hard sell because of the ‘Emperor might have no clothes on’ syndrome. Buyers fear they might discover, on taking them home, that an ape painted them.

Snakes, too, are not everyone’s favourite pet and therefore an unlikely choice for the lounge room wall. Yet they frequently appear full frontal in the work of highly successful Tim Storrier. At a sale of Fine Australian Art in Melbourne on April 11, Hot Wind, an oil on canvas painted by Charles Conder (1868-1909) sold for more than double what was considered an ambitious estimate when it made AUD$936,000. It showed a beautiful woman in a parched river-bed hit by the scorching summer heat with a snake writhing towards her. As winter had still not set in (the day had been unusually warm) when the work was sold at Sotheby’s rooms in Armadale, the concentration of seasonal art buying in the cold winter months could have little to do with the price paid. The oil painted in 1989, was presumably purchased as an important Symbolist work, one of a limited genre in Australian art; and as one of the few remaining presentable works from Conder’s limited Australian years in private hands.

Rarity obviously has a bearing on values but not always inflationary. The disappearance of many Australian colonial and Impressionist paintings into art museums in the 1970s and 1980s meant that few were available to the market in the 1990s and 2000s. So potential collectors looked to other periods and the auction houses assisted by promoting works on which the paint was fresh or which had just come out of the darkroom.

Death is said to be the best career move an artist can make. His or her oeuvre is complete and the number of works known. But death is often anticipated by the market. The dispersal of the George Lambert estate in Sydney in 1930 represented a peak in a near decade long art boom despite the onset of the Great Depression. Early posthumous recognition was seen in the interest shown in the works of Kevin Pro Hart at Christie’s sale of Australian, International and Contemporary Paintings on April 10 and 11 this year. The TV camera crews were at the sale only incidentally because it was Christie’s farewell Australian sale after 36 years in Australia. They were there for the six second rate (even for the artist) Pro Hart works on offer.

The crews were not disappointed. Buyers jumped the bidding, advancing in far greater amounts than they were required to in the hope of knocking out their competition. A painting of tents in a dark landscape titled The Builders accordingly made $48,995, which was three to four times its top estimate.

Usually high prices bring out more work and the prices decline. This happened in the market for contemporary photography in the early 2000s as a number of buyers who had missed out on a particular print were satisfied.

It is often said that art is frequently bought just to match the curtains or to fit the space available. Small paintings became popular in the late 1920s as apartment living took hold. Sculpture suddenly began to sell with a new high achieved at the sale by Christie’s of the William Burge collection in Sydney on March 6, when more than 20 Bob Klippel sculptures found ready buyers at substantial premiums to their purchase prices, even when these were purchased only recently. Along with abstract paintings, they were readily at home in minimalist apartments, especially those in the increasingly popular loft like (open) living spaces (with few walls) carved out of commercial city buildings.

Art in the new millennium, however, appears increasingly priced as an investment with even prestige galleries holding exhibitions catalogued as Blue Chip art. Buyers and dealers often refer to their art portfolios rather than their art collections although with no income return (apart from a small amount out on rental), the normal measures of a good investment such as price earning ratios and dividend yields do not apply. The buying has to be based on past price performance, which often has been spectacular, or a more abstract measure, the potential for capital gain. Large Tim Maguire paintings of fruit doubled in price in the late 1990s over two years to make $200,000 each. John Kelly’s paintings of mock up cows inspired by William Dobell’s wartime experience rose from $2500 in 1994 to a record $188,750 for Cow depot waiting to be painted II.

With a rarely precedented buoyant secondary or resale market, based on the whims of a bath-turbanned lady just out of the shower or diners sipping their second port, anxious to show off to their friends, the prices of Australian art have become increasingly unpredictable and mercurial. The risk can be downwards as well as up. The lady may not have finished showering and the auctioneer may have to go onto the next lot because she has not heard the phone ring.