Annual average yield on paintings since May 1996: 6.82%

[2002年06月30日]

  Many economists, such as W. Beaumol, have questioned whether works of art yield better returns than financial assets, even at the height of the late-eighties speculative boom. Over the periods studied, returns were lower than those available on equities markets. But with share prices apparently locked in a downward spiral, the conclusions today are somewhat different.
Since April 2000, the average value of paintings has risen by nearly 15% while the Nasdaq and CAC 40 have plunged. On the art market price gains tend to be slow but steady. Since May 1996 the paintings segment has offered an annual average yield of 6.82%. And there is substantial scope for further gains: the average value of artworks is still 11.4% lower than at the height of the boom in 1989.

There are differences between investing in a work of art and buying a financial security…art works have the merits of a financial investment without the downside risk, and also give their owners aesthetic pleasure.
Art market investors run much lower medium-term risks than stock market investors. Less informed observers might assume the price of a piece of art reflects only its artistic quality. This would suggest that those who buy art act on their own artistic taste, rather than on rational criteria. This in turn could lead to the conclusion that expertise in the field of art is a very soft science, with shades of fortune telling. The price of a painting is yet perfectly susceptible to scientific analysis and explanation. Collectors act from rational motives. Record hammer prices are not achieved by chance, and where demand for a work is high, this is rarely accidental. The knowledge embedded in the market and the economic laws that underpin it lend the market security and consistency, and iron out wild fluctuations in price.
Overall the speculative aspect of the art market is a minor theme, but particular segments or artists can still offer particularly lucrative gains. Some can double in value within a few years. Likewise, the influence of fashion or rarity can drive prices up more rapidly in certain segments. A carefully chosen art portfolio can generate exceptional gains.

Although the recent record prices for impressionist works have not been as impressive as those paid in the late eighties in many other segments prices are actually higher now.

Painting prices versus stock market indices

base 100 in april 2000

  Artprice index of paintings   CAC40   NASDAQ