And in past years, Hungarian auction gavels have been busy, seeing works at local auctions fetching prices comparable to works of similar quality in other European Union (EU) member states. With the recent renewal of Hungary’s domestic art trade, the country has become a worthy partner, and competitor, of EU auction houses and clients.

Leading gallery-auction house co-owner Judit Virág claims art protection system outdated

At the same time, there are contrasts. Unsuspecting foreign buyers are often left in uncertainty - even on the auction date - as to whether they can take the selected works out of the country. Oftentimes the head of the auction cannot even guarantee the works’ status, given uncertainty on protections placed on works of art that prohibit their export.

Confusing regulations
Although auction houses are stocked with expertise, the final judgment is beyond the control of owners. Confusing regulations can taint the auction world with an unwanted element of risk that can turn away both collectors or traders. Some Budapest auction houses, in their catalogues, don’t even indicate which works are protected, since the fact itself is not always clear..

“Recently, I sold a painting, and the moment the hammer fell, a man representing the museum stood up and declared that the painting was protected, and that he wanted to exercise his preemptive right to buy the work,” recalls Judit Virág, co-owner of the Mű-Terem Galéria. “Then a week or two later, they withdrew their request, and declared the painting as not protected, and that they were in fact not interested in it.”

The regulation of domestic art protection has been outdated and over-stringent for decades, she says.

“In the 1950s, people whose paintings were kept at home were declared protected, [hence, they] received residential support,” she says, outlining historical antecedents of the problem. “So hundreds of mediocre paintings received this label, with many oeuvres put in one category, regardless of their value.”

National Office of Cultural Heritage
The National Office of Cultural Heritage (NOCH) has started to remove paintings from unnecessary protection, on the basis of catalogues compiled and classified according to artists. This process is, however, is slow and inflexible, and not in line with demands of everyday trade.

“Unfortunately, we do not have the resources to follow the commercial values of works of art, and the revision of the protection of works of art require serious research,” said Dénes Bésán Jankovich, Director of the NOCH, “The number of protected works will always be considered high by the market, while the museological community will be more accepting. In Germany, only several hundred works are protected, while in Hungary the number is far greater. About the exact figure, we will only be able to say following research.”

Csaba Nagyházi, president of the National Association of Art Traders (NAAT), considers the current protection and exporting regulations unacceptable.

Munkácsy’s “Dusty Road I” sold for a record HUF 220 million at the Mű-Terem Gallery

“Because of the current regulations, an odd situation can come up if a tourist, on a visit to Hungary, purchases an artifact worth tens of thousands of forints, or wants to take a work over 50 years old home, often the amount paid for the work of art is doubled because of the licensing procedure, and that is provided that the foreigner is patient enough to wait for the nearly one month procedure to be concluded.”

This form of regulation is ruled out in EU member states, where the invoice and certification issued by registered traders on a set value limit (EUR 150,000 limit for paintings) allows for transportation of the work within the EU.

In Hungary, the number of protected art works is far higher than the EU average. In contrast to the typically few hundred works nationally protected in many EU states, many insiders argue that the tens of thousands of protected works in Hungary are not justified.

Art returns to Hungary
Hungary is also seeing a return of many artworks formerly in foreign hands. As a general rule, the highest price paid for a work is in its place of origin or production, which, since the latest burgeoning of the Hungarian art market, has resulted in the return of valuable Hungarian art works to the local market from international locations.

Hungarian buyers not only help retain art works in the country, but impact international markets. In past years, the surge in prices paid at domestic auctions for paintings by Hungarian artists, particularly top-tier paintings, has boosted international recognition of these painters.

The local market has also been posting record sales figures. The hammer price of HUF 220 million paid for Mihály Munkácsy’s work entitled: “Poros út I,” (Dusty Road I), is an impressive reference for international collectors, let alone the local market.

Gallery owners agree that the price boom witnessed in the past years is unlikely to continue, but major surprises may surface as artists are discovered that were neglected before the political changes.

“This is a developing, young market. There are many famous artists whose works have not been associated with estimable, stable prices, such as Gyula Derkovits, István Nagy or László Moholy-Nagy,” says Judit Varga, an art historian and gallery owner. “Galleries are often expected to search for paintings of lesser known artists, present their role in the era, and justify the higher price tag and attention they are given. In this sense, of course, we also bear an impact on the prices.”

Prices are more stable for old master paintings, says Csaba Nagyházi

More stable prices are characteristic for “old master” works. Nagyházi Galéria introduced the European practice of determining lower and upper estimates in an auction in December 2003. The prices of domestic artifacts, and their rate of increase, has stabilized to the extent that, in recent years, some silver objects sold at Nagyházi served as references in international price guides, gallery executives say.

Outstanding works, high prices
The experience of auction-house owner Nagyházi concurs with the observations of gallery owners; outstanding works are sold in Hungary at international prices. There is a major deficit, however, in relation to works of middle or mediocre quality, whose prices continue to be lower than artwork of similar quality on the international market.

Nagyházi outlines a significant change: “Similarly to the traditional practice of foreign auction houses, collecting works for auction from suppliers in many European countries opportunities will expand in Hungary with EU accession if regulations change.”

A fundamentally new trend expected involves Hungarian works not only returned to the country, but specific types of art auctioned off here due to a rise in demand – resulting in higher prices.

“We hope that we succeed in changing legislation and regulations to the benefit of the market, so the preservation and protection of essential values does not impose limitations on art trade,” said Nagyházi.