Muted tones paint the scene of art auctions in 2011

Sales results at auction this year realised $99.4 million, which is down from $103.2 million last year and a long way from the feverish pre-GFC days of 2007 when $175 million of art sold at auction.

In a year when international auctioneers Bonhams entered the Australian market, and Sotheby's restructured as a locally owned Australian company, Menzies Art Brands continued its local dominance. It sold almost $36 million of art, about the same as last year. Deutscher and Hackett, which sold $20 million in 2010, sold only $14 million in 2011. Some of that cash may have gone in the direction of Bonhams, the new auction house on the block run by Mark Fraser. Bonhams sold $5.89 million of art at two auctions. Sotheby's, under new chairman and co-owner Geoffrey Smith, reported sales of $16.3 million, just down from 2010's $17.4 million.

Sydney valuer and art consultant David Hulme, who writes about the market for the online Australian Art Sales Digest, says real estate is still as good a comparison as any to apply to the art market. Just as a great house in a great street will find a buyer at a good price in a depressed market so too will a great piece of art.

"Good paintings will out," says Hulme. "Look at the case of Ben Quilty at Menzies [in Sydney] last week. That painting [Frog Torana 2003] had an estimate of $30,000 to $40,000 and it went for $66,000." (With buyer's premium it cost $81,000.)

Talk to one market expert and you'll find another with a different view. The University of Melbourne's art market analyst Meaghan Wilson-Anastasios is not so sure about the best-house-on-the-street metaphor.

"If you buy a blue-chip property, there are still no guarantees of a price rise," says Wilson-Anastasios. "Look at Brett Whiteley's Arkie Under the Shower," she says. "That painting sold in 2007 for $1.68 million and in September 2010 it sold for $1.3 million".

But in a subdued market, buyers are clinging to blue-chip names. Brett Whiteley was the most traded artist of the year with 62 of the late painter's work for sale. Three of the top 10 paintings sold at auction this year were by Whiteley and were sold at Menzies. These were Washing the Salt off 1 ($1.86 million), The Paddock Late Afternoon ($1.56 million) and The Orange Table ($873,000). Other household names making up the top 10 in sales were paintings by John Brack, Russell Drysdale, Fred Williams, Arthur Boyd and Jeffrey Smart.

Hulme and Wilson-Anastasios agree that the 2011 market might be down, but this new reality is guided by judicious judgment rather than speculation.

"There are buyers out there, but a lot of the people who came in with the idea of art as an investment or superannuation plan have gone," says Hulme.

Wilson-Anastasios agrees that speculators drove the market to an unsustainable high. "There's still a strong base of serious collectors," she says. "These people buy no matter what the economic environment."

But those ever-faithful collectors appear to be absent from the Aboriginal art market. This year the market for indigenous art continued to slide to its lowest levels since 2002. In 2011, sales of Aboriginal art at auction totalled $8.1 million compared with $10.1 million in 2010 and $26.4 million in the 2007 heyday.

"It's still a nascent market," says Wilson-Anastasios. "There are people who got into it without a strong foundation of knowledge in what they were buying." Claims by auction houses that they were aiming to sell half of their Aboriginal lots to overseas buyers might have also contributed to the decline in sales as the Australian dollar rose.

Hulme still thinks the market is healthy and he is impressed by the auction houses' marketing, in their conservative reserve prices, in the standards in the catalogues and research and in their ability to withstand fierce competition.

"I think the auction scene is as exciting as it has always been. Yes, clearance rates might be down, but sometimes they have been at 80 per cent. They are working very, very hard in a tough market."

Sotheby's Geoffrey Smith says the company strategy has included targeting works that have been tightly held for a long time. Two of the biggest prices of the year were recorded at Sotheby's and both came from estate sales: Arthur Boyd's The Frightened Bridegroom (1958) sold for $1.2 million and Russell Drysdale's 1971 Gran sold for $1.17 million.

Mark Fraser says that as the only international auction house in the country, Bonhams is using its status to sell work from Australia at its overseas offices and to "cross- pollinate" its local and international client list to achieve sales.

Both Sotheby's and Bonhams say they will hold at least two Aboriginal art auctions next year, although Smith says lots would number 60 to 80, compared with the 200 to 300 in previous years.