With an artistic, if hardly coincidental, symmetry, the great art market boom of 2006-08 reached its apogee at the very moment Lehman Brothers went bust. On September 15-16 2008, investors splashed out £111m at a Sotheby’s auction of newly pickled works by Damien Hirst. Thirteen months on, next week’s Frieze contemporary art fair in London – Europe’s biggest – and its associated exhibitions and auctions will be an important barometer of confidence, and whether the precipitous plunge in prices is bottoming out. Omens are not good. A Bloomberg survey found low-end estimates for proceeds of contemporary art sales by Sotheby’s, Christie’s and Phillips during Frieze week were down 81 per cent compared with last year.

A deep correction was inevitable. According to Art Market Research, in the two years to September 2008 the average gain for five main art market sectors was a jaw-dropping 210 per cent. Contemporary art prices increased 313 per cent, though, surprisingly, Impressionist prices gained most – 390 per cent.
If the last art bubble of 1988-92 was pumped up by Japanese buying, this one was inflated by bonus-laden investment bankers, hedge fund managers and the odd Russian oligarch. As in financial markets, the idea took hold that prices could only rise.