A record-breaking run of sales on both sides of the Atlantic has caused the value of contemporary art at auction to rise by 55 per cent in a year.

Modern art, produced from the late 19th century to the 1970s, has surged by 44 per cent over the same period, according to figures released yesterday. But as the art world prepares for another round of big sales in London next week, there are fears that the boom may be over already.

The recent turmoil in international financial markets has left many experts worried that the market is poised for a return to the dark days of the early 1990s, when prices collapsed after a period of growth that outstripped even the current goldrush.

Collectors are cashing in now, including Laurence Graff, the billionaire diamond vendor. Sotheby’s and Christie’s are both putting record numbers of contemporary artworks up for sale in the next few weeks, including pieces by Damien Hirst, the graffiti artist Banksy, Andy Warhol, Francis Bacon and Mark Rothko.

Cristina Ruiz, the editor of The Art Newspaper, said that industry insiders were putting on a brave face because any talk of falling prices would quickly “become a self-fulfilling prophecy” in a market that is about confidence.

“The question is: is art now an investment like gold, which is completely separate from other markets, or is it a luxury, like a yacht? People have argued that in the past ten years we have seen it transform from being a luxury to being an asset. Next week will be the big test.”

Only then will it become clear whether the Russian oligarchs, Indian technology billionaires, Chinese businessmen, Middle Eastern oil barons and hedge fund managers who have fuelled the market growth have had their spending power trimmed.

Rothko’s White Center (Yellow, Pink and Lavender on Rose) sold in May for $72.8 million (£35.6 million), the most paid for postwar art at auction.

Portrait of pictures
Percentage change in art prices from June 2006 to June 2007

+7.6 Old Masters
-7.5 British 17th-century and 19th-century portraits
+19.1 European 19th-century art
+26.3 English sporting painting
-27.5 English watercolours
+6.3 English 20th-century painting
+8.7 English 19th-century painting
+44.3 Modern art
+55.3 Contemporary art

Source: Hiscox Art Market Research Index

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