LONDON—Can the art market sustain its blistering growth? That was the question surrounding last week’s mid-season Contemporary art sales in London, held to coincide with the popular Frieze Art Fair. The London sales are seen as an important test of the market because they come less than a month before New York’s marquee auctions in November. The major auction houses were primed with big works, including five by Jean-Michel Basquiat.

The Friday-, Saturday-, and Sunday-night sales were full to bursting with art and buyers. At many lots there were more than a dozen bidders on phone lines—leaving the well-dressed auctioneers looking more like traffic cops. But by the end of the spree, three Basquiats had failed to find buyers—and the remaining two sold for low prices; several Damien Hirsts didn’t make their low estimates; and a bunch of other recently hot artists, like John Currin and Martin Kippenberger, struggled to attract buyers.

Works failing at auction isn’t necessarily the symptom of a sick market, however—in fact, it can be a sign of a healthy one. To the extent that the art market behaves like the financial markets, it is both highly efficient and adaptable—money flows to art that is in demand and away from works whose sellers are seeking to merely cash in on previous sales. But works of art are far from commodities. “The idea of calling something ‘the art market’ is misleading,” says Thea Westreich, a prominent New York art adviser. “It’s too diverse. Categories are rapidly folding in, expanding, and diluting at the same time.”

Chinese contemporary art, for example, which benefits from a relative lack of supply and rapidly increasing demand from newly wealthy Chinese collectors, grabbed big numbers in London. Bidders at Sotheby’s drove Yue Minjun’s Execution, a self-portrait that depicts the artist as both the firing squad and a line of victims, to $5.2 million, more than Yue’s major works have sold for recently.

But the best of Yue’s work has been consistently selling in the $4 million range all year. The shock was that other, lesser-known painters joined him in that league. Zeng Fanzhi’s Xiehe Hospital Series, Triptych went for $5.5 million at Phillips de Pury, blasting past the estimate of $1 million to $1.4 million, and Indian painter Raqib Shaw’s Garden of Earthly Delights III, estimated at $1.2 million by Sotheby’s, went for $5 million.

Dealers disagree about the meaning of such blowouts. For some, big price jumps represent nothing more than two bidders unable to keep their egos in check. Others see a harbinger of new value, especially if a work is unique and powerful. Yet everyone agrees that the result will be to draw more work by the artist onto the market—with higher estimates to test new price levels. If that work is not A-plus material, it will have trouble selling within the aggressive new range, let alone hitting an even higher price level. That accounts for many of the no-sells that have been on the market.

“That’s the way that these cycles work,” says Sotheby’s Contemporary expert Francis Outred. “A great work comes to market and makes a great price. Temptation is given into and then you get high estimates.”