Cost-of-living pressures show no favours, with the ultra-rich tightening their belts, resulting in a decline in the demand for high-end art, upmarket jewellery and handbags, and collectable cars.

While prices of artworks are still showing strong growth, thanks to some cashed-up investors, higher interest rates and inflationary concerns weighed down the rate of demand growth in 2023, the latest Knight Frank Wealth Report reveals.

The Knight Frank’s Luxury Investment Index, which tracks the value of 10 popular collectable investments of passion, edged into marginal negative territory for only the second time, with prices down on average 1 per cent across the index, despite a year of record-breaking sales in the luxury market.

Andrew Shirley, editor of the Wealth Report, said it sounded like a bumper year for luxury investments; however, the index reveals a less positive picture.

“The index edged into negative year-end territory in 2023, albeit by a fraction of a per cent, as several stalwart members of the index dropped into the red or showed minimal gains,” Shirley said.

“However, a peek behind the headlines reveals it’s not all doom and gloom, with some of the losses simply down to the froth coming off markets, according to the experts who supply the data [for the index].”

Overall, art topped the index with price growth of 11 per cent in 2023; jewellery gained 8 per cent; watches 5 per cent and coloured diamonds prices rose 2 per cent. However, a former favourite for collectors – rare whisky, fermented on the shelf – recorded a 9 per cent drop in prices.