Personal Finance: Soft, cuddly and always in demand

Between 1989 and 1995, auction prices for teddy bears doubled. And they're still rising. John Windsor explains why even the ugliest of bears have their admirers

Buy for love," say the dealers and auctioneers. They must mean teddy bears. Few other collectables are so doted upon. Buying for love usually produces a solid market in which collectors tend to hang on to their purchases in spite of price wobbles. Is that what the teddy market is like?

It does not look like it. As the Christmas teddy bear auctions approach, those cuddly bundles of stuffed mohair have begun to look like a scary prospect for would-be collector-investors. On the one hand, they have been fetching reckless prices; pounds 110,000 was paid at Christie's South Kensington by the Japanese businessman Yoshihiro Sekiguchi, for a 1904 Steiff bear. On the other hand, sentimental old women can be seen bidding up the price of battered bears, just because they feel sorry for them.

Love, or just whim? No market likes whims. Is there a risk that the teddy bear market might suddenly turn into a bear market?

In fact, the time to make a killing out of teddies is already over. Between 1989, when adult collectors began falling in love with them, and 1995, auction prices doubled. Since then, they have been rising at a modest 10 per cent a year. But it is still a buoyant market.

Although the occasional crazy price may give would-be buyers the jitters, there is usually an explanation for them. That world-record pounds 110,000, for example, was paid for Teddy Girl, a bear with a unique provenance: it accompanied the famous teddy collector Colonel Bob Henderson into the trenches of the First World War, where it was much photographed. It became a unique piece of social history.

Meanwhile, prices for bears in the market's other ranks have continued to rise as a solid base of collectors has built up. Ian Pout, who owns Teddy Bears of Witney, the first shop specialising in teddies, estimates that when he issued his first catalogue in 1985, 95 per cent of buyers were women. Now both sexes are buying - and men outnumber women. He reports that young couples have started buying, too. "They want love in their home", he says, "and a teddy is a tangible sign of love". Since the late Eighties, teddy collectors' clubs and magazines have helped to boost bears' popularity. There are new faces at every auction.

South Ken's teddy specialist, Leyla Maniera, may be putting all the market info into a nutshell when she says: "Some people attend a pre-sale view, see a little face poking out and just fall in love with it. They have to have it".

It is the classic Edwardian teddy that is easiest to fall in love with. Mr Pout describes it as having a centre seam on its head, a hump on its back, well-rounded face with a long muzzle, long arms, big feet, narrow ankles and angled wrists.

More flinty-hearted collector-investors are not seduced by cuteness alone. In a market whose prices have levelled out, they have become more discriminating. They know that German Steiff bears - with button in ear and unequalled for quality - are still the safest investment. It is worth paying pounds 800 or more at auction for an early Steiff if it is in fine condition - that is, seldom played with, relatively unloved. A rare Steiff in black, rather than gold, of 1911-1912, can fetch around pounds 10,000 at auction. Bonhams' teddy expert, Leigh Gotch, estimates that a rare white Steiff of 1910 that sold for pounds 1,400 in 1988 would fetch pounds 3,000 today.

Such pre-First World War bears look more like real bears. They may be a bit spindly and the faces quite ugly - unlike the rounder, cuddlier type introduced in the Twenties. But demand for them has increased. Even ugly bears can inspire love.

Old teddies that have been played with have a fetishistic attraction that is all their own. But there is a quite separate market for modern reproduction bears. The best of these are rising in price. Steiff's first annual limited-edition bear, of which 2,000 were issued in this country, cost pounds 150 retail in 1989 and now sells for pounds 600 or more in mint-and-boxed condition. Steiff's smaller bear of 1990, in an edition of 3,000, sold for pounds 110 and now changes hands at pounds 250.

Mr Pout, a former stockbroker, gives the following then-and-now prices for Steiff annuals: 1991 pounds 140, now pounds 350; 1992 pounds 135, now pounds 260-pounds 270; 1993 pounds 245, now pounds 350; 1994 pounds 145, now pounds 300; 1995 pounds 135, now pounds 250; 1996 pounds 145, now pounds 195; 1997 pounds 155, now pounds 185. The 1998 edition is retailing at pounds 165.

Among Mr Pout's editions of teddies is Witney Deli, a faithful reproduction of the bear that starred in Brideshead Revisited as Aloysius, Sebastian Flyte's pet. Formerly in the Henderson collection, Aloysius is now owned by Mr Pout. The 5,000 Delis, complete with scarf, cost pounds 275 each.

Teddy Bears of Witney (01993-702616). Bonhams' dolls, toys and teddy bear sale, 17 December, 11am (0171-393 3951/3953). Christie's South Kensington teddy bear sale, 4 December, 2pm (0171-581 7611)