The global art market contracted by 4% year-over-year to total USD 65 billion in 2023, remaining above its USD 64.4 billion pre-pandemic high, according to The Art Basel and UBS Art Market Report 2024, authored by Dr. Clare McAndrew, the founder of Arts Economics. The report can be downloaded for free here.

‘If everyone had kept doing as well as in 2022, we could have seen some real growth, but there was a divergence in performance last year,’ McAndrew said. ‘In 2022, the high end did well. Last year, the high end did poorly and while performance wasn’t great, the rest of the market chugged along. The market is not remarkably above that of 2019, but it does seem to have recovered from COVID.’ Hampering greater growth were factors including high inflation and interest rates, an ongoing war in Ukraine, a new war in the Middle East, and uncertainty about future economic growth in China, caused partly by weakness in the real estate market.

Among the most notable findings in this year’s report was the rise in the volume of transactions, offsetting the drop in value. Another was the increased strength at the lower end of the market: Some 39.4 million transactions were conducted, up by 4% on 2022, driven by the dynamism at lower price levels for both dealers and auction houses. While uncertain times in the past have often seen a ‘flight to quality,’ in which buyers focus on goods that have been proven in the market and bear higher price tags, in 2023 there was particular growth in the sales volumes of works priced USD 50,000 and below.

The US market remained the world’s largest, accounting for 42% of sales by value, but it saw a notable fall of 10% to USD 27.2 billion in 2023. The thinning of trade at the higher end was a key factor, since the New York auction houses are typically a magnet for the highest-priced goods on the secondary market, and imports were down, McAndrew said. But she also points out that the drop should be viewed in context: ‘The US market was at an absolute peak in 2022, so it would have been difficult to make any inroads from there. It sounds like a big decline, but not when you consider that the US market initially recovered from COVID so much better than other markets. The drop is partly due to the US market having reached over USD 30 billion the year before.’

The UK and China jockey back and forth for the number two position among world markets, and 2023 saw China surpass the UK to become the second largest, with the value of sales rising by what McAndrew called an ‘astonishing’ 9% to about USD 12.2 billion from the previous year’s USD 11.2 billion. Auction houses in mainland China and Hong Kong saw a surge in activity in the first half of the year as material came to market after COVID-imposed delays, and throughout the year, art fairs in the region returned to full-scale programming. ‘That was a spike in the first half, not exactly an artificial spike, but certainly related to COVID,’ McAndrew said. However, ‘there was definitely a flattening in the second half of the year,’ she added.

The UK market, by contrast, experienced an 8% drop to USD 10.9 billion in 2023 from its USD 11.9 billion level in 2022. As another magnet for the most desirable material at auction, it was also hurt by the decline in trading at the top end.

‘The UK has done surprisingly well over the last couple of years, considering Brexit and COVID,’ said McAndrew, ‘but imports dropped significantly last year. Even though a lot of those are third-country imports and not subject to import VAT, good material does get siphoned off to New York, which is something the UK is always worried about. Those factors, along with China doing relatively well, drove the UK’s move to third place.’

Dealers had a challenging year, with sales decreasing 3% year-over-year to USD 36.1 billion. Facing elevated costs on line items such as staffing, logistics, and rent and mortgage payments, dealers and galleries found it difficult to stay ahead, with 40% of dealers surveyed saying they were less profitable than in 2022.

‘For dealers, the question this year was not “How much did you sell?” but rather “How much did you make?”’ McAndrew said. ‘Everybody does well when things are going well, but only the people who are strategic and financially minded do so in more straitened times. I’m reassured by the tenacity that some businesses showed in getting through this challenging year.’

Auctioneers did not get off easy, either, with serious declines at the top end. The ultra-high end, for example, comprising works priced at USD 10 million and above, was down 40% by value of sales in the 2023 season. Overall, auction sales fell by 7%, rather than the dealers’ 3%, to USD 25.1 billion. While six artworks sold for north of USD 100 million in 2022, just two sold at that level in 2023, McAndrew pointed out.

‘This was very much supply-driven,’ McAndrew observed. ‘Because sellers are unsure of how things were going in the market, they didn’t bring things to auction unless they had to sell.’

Another notable finding was the strong performance of works offered at relatively modest prices. ‘A lot of people are selling quite well at lower levels, including bigger galleries, but it seemed harder to move the material at the top,’ she said. This meant greater success for smaller galleries and dealers with a turnover under USD 500,000. They had the largest increase in sales, of 11%, while those with turnover exceeding USD 10 million saw an average decline of 7%.

A greater number of the more modest sales were being conducted online than in 2022. While the art market has long trailed behind other businesses in selling via digital channels, these sales grew by 7% in 2023 to total USD 11.8 billion, which accounted for 18% of the market. This put the art market in alignment with other industries.

‘The online market may have found its level,’ said McAndrew. ‘We’re still seeing that the prices are a little lower, and that big live auction sales need the theater that goes along with them, so there’s always going to be a price differential, but online is now an integral part of how the art market buys and sells.’