Some auctioneers are trumpeting a top-down revival of the market, which crashed spectacularly in 1991-92, leaving some speculators with paintings worth a third of what they had paid and Cork Street festooned with To Let signs.
The first auction since November's headline prices is at Phillips on Tuesday (11am) with estimates mostly under pounds 1,000. Its target audience - new buyers with modest means - may well be confused: gong-banging for new Lowry and Spencer price records has become an annual event since the crash, while the market as a whole has been hauling itself up by its bootstraps. The leading dealer Leslie Waddington warns: "It's a gradual recovery, not complete - not a bad market, but not yet a strong one."
There is not much action in the pounds 100,000-pounds 200,000 range but the market under pounds 20,000 is worth a look.
First point to note is that with dealers still strapped for cash and being outbid by private buyers (Sotheby's estimates 85 per cent of its buyers are private and Christie's estimates 70 per cent, a reverse of the pre-crash situation), market-making in specific names by dealers is only just beginning again. Susannah Pollen of Sotheby's reports that, whereas previously she could predict which lots would be carried off by which dealers, nowadays the bids are a product of "a hundred different whims" of private buyers. This makes it difficult for investors to spot price trends to follow.
These days, whenever a dealer is seen buying up a name, the private buyer competition tends to pile in. For example, London dealer David Messum recently began bidding for the idiosyncratic figurative paintings of Julian Trevelyan RA (1910-1988), who exhibited at the first International Surrealist exhibition in London in 1936, was associated with the London Group, and whose work will have a touring retrospective curated by Nicholas Usherwood, beginning in October at the RCA, where Trevelyan taught Hockney print making.
Messum paid only pounds 2,530 for Trevelyan's Cretan Spring landscape, estimated pounds 2,500-pounds 3,500 at Christie's South Kensington in September. But two months later, private bidders at Christie's King Street saleroom forced him up to pounds 7,130 for Trevelyan's The Weir, which carried the same estimate.
Pre-recession, the dealers were the market-makers. They lent stability, knowing that they had to supply clients at reasonable prices while earning a margin for themselves. These days, outbid and empty-handed, they smart under the auctioneer's hollow, "thank you for your support" on their way out.
The consolation is that the new private buyers are, for the most part, not speculators likely to bust the market by dumping at the first tremors of a wobble in prices. Their taste is towards adventurous figuratives rather than the Impressionist style.
One dealer whose buying is worth watching is Spink-Leger, a marriage of two galleries injected with new money last September by its owners, Christie's. They have been bidding aggressively for British watercolours and Modern Brits and will be holding a selling exhibition of 20th century British artists in April.
Among them will be Henri Gaudier-Brzeska, killed in the first World War. Ten of his pencil and pen-and-ink drawings of animals, birds and people are in Phillips' sale next week, estimated at under pounds 1,000. Spink- Leger will also be showing Sickert, William and Ben Nicholson, Innes, Yeats, Burra, Pasmore, Spencer, Spear, Tunnard and Vaughan.
If you think it demeaning to follow dealers, swot up on your art history and go for lesser-known members of the Mod Brit "schools" - Newlyn, Slade, Camden Town, Euston Road, Bloomsbury, St Ives, Neo-Romantic and London.
Underpriced but talented names can rise suddenly as bidders collectively realise that their low prices are unsustainable. The colourful, semi-abstract still lifes of Mary Fedden (born 1915) fell at auction by 50-60 per cent from their peak of 1988-90. They could be had for pounds 2,000-pounds 4,000 until last October.
Now they fetch pounds 3,000-pounds 8,500 and are still rising. Similar recognition may be descending upon another RA, Frederick Gore (b 1913), whose work is rare at auction. Somebody got a bargain when they bought his Spring Landscape, Clement's Reach, Meopham, full of vibrant blue and pink furrows, for pounds 2,990 in Christie's November sale.
The ever-popular but much-derided sunlit nudes of Ken Russell RA, which have reached Fedden's prices and are firming up still further, sell best if they are recent. People seem to want to know what the indefatigable 65-year old is getting up to. Keith Vaughan's prices are firming up, too, but the buying power for his is homosexual.
Do your own research on price trends - individual auction results can be misleading. For example, three blocky paintings by William Scott RA (1913-1989), who has benefited from a critical re-assessment, failed to sell in Sotheby's November sale. The art trade press reported that the market for him seemed to be running out of steam. In fact, the best Scotts are fetching around pounds 40,000, double 1989 values. Sotheby's estimates of up to pounds 60,000-pounds 80,000 were over-egged.
If you are after a managed investment in Mod Brits, find a reliable dealer in charge of selling a deceased artist's estate, whose income depends upon maximising prices. David Messum is selling the Impressionistic, Braque-like landscapes and still lifes of the Suffolk artist Peggy Somerville (1918-1975) at judicious intervals. Her work is catalogued in a book, Peggy Somerville: An English Impressionist, by Stephen Reiss, pounds 25, published by the Antique Collectors' Club. Prices: from pounds 500 for drawings and pastels, oils around pounds 2,500.
Phillips (0171-629 6602); David Messum (0171-437 5545)