Prices of art enter a whole new genre, Yazzy's at www.williamvedult.com

According to the The Financial Times the high prices paid for works by Renoir, Francis Bacon and Picasso at the auction houses' Impressionist, Modern and Contemporary sales this week are a sign of the robustness of the art market. While the downturn in the economy has had a damaging effect on share prices, the art market has thus far emerged unscathed.

Triptych 1974-77 , a celebrated work that Bacon painted after his lover committed suicide, sold for £26.3m (a new European record for the genre) at Christie's sale last Wednesday, while a portrait of Dora Maar by Picasso was auctioned for £7.4m at Sotheby's earlier in the week. Works by German expressionists were also highly sought, with Franz Marc's Weidende Pferde III selling for £12.3m.

"The press is desperate to write stories about how the credit crunch is buggering the art market, but the opposite has proved to be true," says Edward Dolman, Christie's chief executive.

Art has continued to thrive as an investment over the past year, in spite of the effects of the subprime crisis and talk of a US recession, with Christie's and Sotheby's achieving combined sales of more than £6bn in 2007.

This week, Sotheby's raised £144.5m from its three Impressionist & Modern Art sales, its highest-ever total from a sale of this type in Europe, and up from last year's total for the week of £121m. Christie's raised more than £220m from its six sales, building on a total of £200m in 2007.

The sales come at a time when prices for Impressionist, modern, post-war and contemporary art are continuing to rise, up by 40 per cent in the past two years, in spite of regular warnings by dealers that they have reached a peak. But analysts claim a slowdown in the market is likely, with art prices tending to lag behind falling financial markets by at least a year.

While prices for contemporary art have risen at the quickest pace, Impressionist works, which tend to be slightly more affordable on average, are generating more enthusiasm from investors. And Old Masters paintings, which are one of the most overlooked genres, are also likely to see significant price increases. "I still believe in the Old Masters market," says Dolman. "You can get a good Rubens sketch for £2m to £3m."

In a packed saleroom at Christie's Post-War & Contemporary auction last week was a collection of 54 works by American and European painters. Those on offer included Gerhard Richter's Zwei Liebespaare , which sold for a record price for the artist of £7.3m, Jean-Michel Basquiat's Palm Springs Jump , which went for £6.5m, and Bridget Riley's Static 2, which made a world record for a British artist at £1.5m. The fate of the Bacon triptych was sealed quickly. A phone bid from the saleroom doorway beat just one other bidder to secure the three gilt-framed works. Pilar Ordovas, head of post-war and contemporary art at Christie's, says the sale was a testament to the "incredible strength of London" in the world art market.

Sotheby's three Impressionist and modern sales this week offered German expressionist Alexej von Jawlensky's Schokko mit Tellerhut , which sold for £9.4m, doubling the price it reached in New York in 2003. Pierre-Auguste Renoir's impressionist La Loge sold for £7.4m, tripling its estimate, and Alberto Giacometti's Buste sold for £5.6m.

A solid week of sales across a range of periods and genres at both auction houses spells continued optimism in art investment.

Interest in German and Austrian art remains strong. The 25 German and Austrian expressionist works sold at Tuesday's Impressionist and modern sale at Sotheby's raised a total of £39.6m, the highest ever sum for a group of such works in Europe. Helena Newman, Sotheby's vice-chairman of Impressionist and modern art, says that a broadening of the market for German expressionists outside Germany itself was adding to their popularity. "Collectors now want to see a German work on their wall alongside French masters like Matisse," says Newman. This has strengthened what used to be an undervalued area of the art market and brought prices to match.

Investors interested in taking part in the bidding still have the opportunity as Sotheby's post-war and contemporary art sales will not take place until February 27.

Canny art investors will also take heed of this week's landmark sale of urban art at Bonham's, the world's first such auction, which fetched £1m. Lots that sold significantly above their estimates included Banksy's Laugh Now stencil, which raised the record price for the night, at £228,000, and his portrait of Kate Moss, which went for £96,000, more than triple its estimate. Bristol-based street artist Nick Walker's Moona Lisa achieved £54,000, dramatically exceeding its estimate of £3,000-£5,000, and Adam Neate's The Apprentice surpassed an estimate of £25,000-£30,000 to sell for £43,200.