IT IS crunch time for the contemporary art boom that has made multi-millionaires out of the likes of Damien Hirst. A series of big sales next month will pose the first big test for art prices since the “credit crunch” turmoil hit the financial markets.

“We’ve not been in a situation like it before,” said Cristina Ruiz, editor of The Art Newspaper. “Everyone is wondering whether it [the financial turmoil] will spill over into the art market.”

A mix of fear and exuberance is spreading through galleries and auction houses. After years of an extraordinary boom, “people are definitely cashing in”, according to Ruiz - partly because they fear a repeat of the late 1980s and early 1990s when some art values plunged by half.

Among the sellers is Laurence Graff, a billionaire who made his fortune from diamonds. He is sending 30 works of art through the auctioneer Christie’s International. He is said to have been guaranteed minimum prices for the works and believes that “it might be good timing - it won’t be bad, for sure”. Another seller is Marino Golinelli, an Italian multi-millionaire and philanthropist, whose collection includes works by Gilbert and George and Anish Kapoor.

One London dealer said: “Contemporary art has been the big money spinner in recent years so the sales coming up will be a major test.” A New York gallery owner agreed: “Money hasn’t been an issue for people for a while, but there’s a real sense here and in London that we’ve reached a turning point.”

Doom-mongers are dubbing the blitz of forthcoming London sales as “judgment week”. It will begin on October 11 with the opening of the Frieze art fair, which attracts dealers from all over the world.

The following day Sotheby’s will hold a sale of 68 lots of contemporary fine art, including a Hirst painting executed in household gloss, estimated at £1.8m to £2.5m. Another Hirst, in cellulose paint on MDF, is estimated at £800,000 to £1.2m, and a picture by the graffiti artist Banksy called Rude Lord is estimated at £150,000 to £200,000.

Several works by Andy Warhol will also go under the hammer with estimates from £120,000 to £1.2m; a work by Francis Bacon is valued at £1.5m to £2m and an untitled Mark Rothko known as Blue Divided by Blue is put at £2.2m to £2.8m A day after the Sotheby’s extravaganza the auctioneer Phillips de Pury will run four back-to-back sales of contemporary art from private collectors hoping to capitalise on high prices. Adding to the frenzied atmosphere, Christie’s will then hold a sale of 81 works of postwar and contemporary art.

To the doubters all the signs of an overheating market are there. Sotheby’s and Christie’s will be putting record numbers of works up for sale. Last month For the Love of God, a diamond-encrusted skull created by Hirst, was said to have sold for £50m, although some art market sources claim the price was closer to £38m. Either way the price is seen as another sign of a market at dizzying heights.

Richard Feigen, a leading US dealer, argues that the bubble has to burst: “There will be much carnage. Speculators will be burnt. The distortions in art market values are too blatant to be sustained. But when? Who knows?”

Others are more optimistic, arguing that art markets may provide a haven when other investments such as shares and property are looking uncertain.

“There seems to be no slackening of pace yet,” said one dealer. “A mid-season sale in New York this month was quite small, but it had an 80% selling rate which was good. There is an argument that at other times of financial crisis people put money into art.”

Ruiz remains open-minded.

“It’s a very interesting situation. Even the smartest people don’t have a clue what’s going to happen,” she said.

In the late 1980s art prices boomed when Japanese collectors bought at inflated prices with borrowed money. When the buyers defaulted on their loans the market imploded.

“The art market is all about confidence,” said Ruiz. “It’s very hard to find someone saying it’s heading for disaster. But if one of these big sales crashes then there will be serious problems.”

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