Value of classic cars and fine art plunges as photographs soar | Investing

Classic cars and works of fine art tumbled in value in 2016, while photography and rare musical instruments emerged as the hottest collectors’ items, according to a leading private bank.

The fall in the value of classic cars – down in price by 10.4% last year – comes after years of booming demand that has made them one of the best investments over the past decade, said Coutts.

Fine art has fallen out of favour among the world’s billionaires, with prices down 6.2% last year. Modern and impressionist art is selling for 12% below 2007 peak, while old masters and 19th-century art are fetching 40% less at auctions than before the financial crisis. Collectors have also lost interest in rugs and carpets with 2016 prices at an 11-year low.

Rare musical instruments topped the table for price increases among collectables in 2016. They rose in value by 16.4% last year, although Coutts said prices were highly volatile and had increased little in total over the last decade.

Photography was probably the hottest new investment area among collectables, said Coutts. A photograph of visitors to the Art Institute of Chicago in 1990 by Thomas Struth sold for $777,080 (£600,890) at Phillips London, with pictures by Gilbert & George, Robert Mapplethorpe and Andreas Gurksy all making more than $400,000.

“It is definitely one of our fastest-growing categories,” said Brandei Estes, head of photographs at auctioneer Sotheby’s in London. “It’s the nature of the work; it is the most democratic of art forms and because of the relatively accessible price points, it’s an attractive category for the growing middle market.”

Half the Coutts index of “passion assets” is made up of items the bank rates as of interest to ultra-high net worth individuals – led by “trophy” property. It said the return on “billionaire property” was only 1.8% in 2016, or little more than the average saver in the UK obtained on their Isa. Coutts defines billionaire property as houses that sell for more than £10m.

“Billionaire property prices grew rapidly from 2008 to 2012, increasing nearly 40%, but have since risen less than 6% and increased less than 2% last year,” said Coutts, partly blaming stamp duty and Brexit for price falls in London.

Property prices in Paris have also dipped, Coutts said, although values in Sydney have surged. “Billionaire property prices in Paris have declined over 30% since 2012 while those in Sydney increased more than 70% during the same period.”

Classic cars have provided the healthiest returns since Coutts established its index in 2005, despite 2016’s fall, with average prices rising more than fourfold. “Prices at the very top end of the market remain robust … The most coveted cars continue to go up and the gap between the very best and average only widens.”

The classic cars in the Coutts index all needed to sell for more than $500,000, and each of the models needed to have been sold more than 10 times at auction to capture a timeline of prices. Seven of the top 10 are different Ferrari models, with a Mercedes 300 SL, a Shelby Cobra 289 and Aston Martin DB5 making up the rest.

Fine wines and classic watches are recovering in price following recent downturns. Average prices for wine rose nearly 10% in 2016 but remain 20% below their 2011 peak. Classic watches rose by 6.7% in 2016 but are still 10% lower than in 2012. Eight out of the top 10 watches sold at Sotheby’s last year were made by Patek Phillipe, with a 1949 wristwatch selling for $730,000.