An art museum has been outbid at auction – despite what it called its “Herculean” efforts – to bring a JMW Turner painting home to the city that inspired it following its rediscovery after 150 years.

Painted in 1792, when Turner was 17, The Rising Squall features a former hot spring and spa in Bristol, as seen from the east bank of the River Avon before Clifton Suspension Bridge was built.

At Sotheby’s auction house on Wednesday, the painting sold to a private UK collector for £1.9m, nearly eight times the estimate price.

Bristol Museum and Art Gallery had been fundraising to acquire the masterpiece, but the combined total of £109,000 will now be returned to those who donated.

It is the earliest-known oil painting ever exhibited by the artist, and is believed to be the only one depicting a Bristol scene.

The painting had been lost for 150 years before the artist’s signature was rediscovered last year during a restoration project.

During its one-week campaign, more than 1,700 people contributed to the Bring Turner Home fundraiser.

But, despite the dedication from art enthusiasts across the country, Kate Newnham, senior curator at Bristol Museum and Art Gallery, said “it just wasn’t our night”.

“The response from the public has been simply extraordinary,” she said.

“Of course we would have liked a different outcome but we’re still very positive, this isn’t the end of the story.”

Ms Newnham revealed plans were under way to celebrate the public’s generosity with a rare display of Turner’s watercolour collection later this year – to coincide with the 250th anniversary of Turner’s birth.

Due to their delicate nature, the four paintings have not been exhibited for 11 years.

“It will be a chance to really celebrate the work Turner did in Bristol and the inspiration he got from the amazing landscape of the Avon gorge,” Ms Newnham continued.

“It really was the city and landscape that got his career off to a flying start.

“We are proud to be at the heart of a city that believes in access to art and culture and that comes together to support it.”