Leading article: Work in progress

It looks like a classic bubble. As we report today, contemporary art prices have risen by 50 per cent in a single year. And some feel that this is a bubble that is about to burst. Should we be concerned?

To answer that we need to bear in mind the history of the art market. It has always been the wealthy who have bought fine art. And as a result the market has always fluctuated with the fortunes of the very rich. What we are seeing now is no different.

The extraordinary contemporary art boom of recent years has been fuelled by the fortunes being made in the financial centres of London and New York, the petro-riches of Russia and the Middle East, and the fast-growing economies of China and India. It is the prospect of a lower round of bonuses in the financial world that is firing predictions of a crash. So far, so divorced from most of our lives.

Yet there is a public interest in all this. The boom of recent years has seen an unprecedented amount of investment going into contemporary art.

Where the rich once ploughed their cash into works of universally accepted quality such as impressionists and old masters (or niche parts of the contemporary market such as abstract expressionism), now they are much more willing to invest in all manner of new work. That has created a healthy dynamism in the contemporary art world. Britain has been a particular beneficiary of this, both culturally and commercially.

If the bubble does burst and prices begin to fall, we must hope that the appetite of collectors for exciting contemporary works survives.