Put money in paintings — beat inflation

Press, 12 January 1977, Page 13

Put money in paintings — beat inflation

OLIVER RIDDELL looks at New Zealand painting as an investment—and is sold on the idea ...

Looking for an investment that is a sure-fire hedge against inflation? Have you plenty of space on the walls of your house? Does your income greatly exceed your expenditure — and is this happy state of affairs likely to continue? If the answer to all of these questions is yes, then as well as thinking about sports cars and yachts, you should also be seriously considering buying New Zealand paintings. The escalation in prices for New Zealand paintings over the last 15 years now shows some signs of tapering off, but this' i*s thought to be only temporary. The long-term prospects for the sale of works of art are very encouraging indeed. Two recent sales in Wellington brought smiles to the faces of the auctioneers. In the first, of pre-1900 paintings, a 32in x 54in watercolour of Mt Aspiring by John Gully brought $ll,OOO for the vendor. Twenty-seven paintings of the 138 in the catalogue sold for more than $lOOO and the 112 lots averaged $1090.80. A subsequent catalogue of post-1900 paintings did not sell nearly as well. Still $4OOO was paid for a gouache by Frances Hodgkins of the River Severn. The greatest demand is for nineteenth century works, and although only the favoured paintings of such as Goldie, Gully, or van der Velden, are likely to cost more than $lO,OOO, there is a host of lesser painters whose works now require an outlay of several thousand dollars to buy. Such painters have passed the point where the value is limited to their artistic merits, and have reached the stage where possession of their paintings is an investment as well as a pleasure. Probably the largest single buyer of pre-1900 paintings is the Alexander Turnbull Library in Wellington, while the various public galleries are buyers too (as their financial state permits), but a very large proportion of the works go to private collectors. These people are often publicity shy, and tend to do their buying through

agents, or through bids lodged with the auctioneers. The reason for their coyness is their fear of burglary or vandalism, plus pressure from their insurance companies to keep knowledge of their possessions as limited as possible. It is through the agents and auctioneeers that the clearest picture of who are buying, and why, emerges. Buyers seem to fall, generally, within three categories:— 1. Those who buy art as an investment, to be realised if necessary, but more usually kept as an asset to be disposed of by the estate after death. Such buyers generally have fine homes in which to show off their fine paintings, and have little trouble in meeting the extremely high premiums required to insure an art collection — plus the expense of burglar-proofing the rooms in which the collection is kept. 2. Those who collect for the love of collecting,-and are akin to stamp, book, coin, and other collectors. These people bid only on what they like, but often lack the means to secure them, and can be identified at auctions as either the underbidders or those who stop waving their catalogues when the painting reaches half the eventual price paid by a member of the first group. 3. Those who haunt auctions and buy those works they consider undervalued. They are usually just as knowledable as members of the second group, but have the soul of a member of the first group — without the means. They back their judgment on the state of the market, or the likely future popularity of an artist whose work is not in great demand yet. Membership of these three groups is not necessarily exclusive — a buyer could belong to both the second and third, for example. And the definitions of the groups has not reflected the joy of possession or the love of a particular work that possession usually entails. Members of all three groups become addicted to their hobby. When the market for New Zealand paintings is

booming, none of the three groups is particularly happy; but the first group can still afford to buy and the third can still hope, even if the second group is frustrated. When the market is slack, all groups are happy, but the second group is happiest. For many years now inflation in prices of New Zealand paintings has been running far ahead of genera] inflation within the economy. This has encouraged feverish activity by the first and third groups. But now the market is slacker; still rising, but probably at a slower rate than the general economy. This is the best chance members of the second

group have had to buy for many years — and it may be the best chance for many years to come. The market for New Zealand paintings is showing the same volatility as the international painting market — though local prices bear no relationship to the astronomical sums paid overseas.

Still, $lO,OOO-plus is not an insignificant sum to pay for an investment against inflation, for an asset with which the buyer is not likely to pan. in his own lifetime. Such a purchase cannot be considered only as an investment, but must also be seen as a statement of individual taste.