The preowned luxury watch market is facing a significant downturn with the secondhand Rolex watch prices index hitting the lowest level since May 2021. Factors such as the behavior of younger customers, a slowing global economy, rising interest rates, the cryptocurrency crash and increased supply have contributed to this slump.
Secondhand Rolex Watch Prices Index Fall Almost In line With Other Indexes
The WatchCharts index, tracking the secondhand prices of 30 Rolex models, has now reached its lowest level since May 2021, registering a 13.2% year-over-year decrease. The index has been under constant pressure since the end of April after rebounding earlier this year.
WatchCharts Rolex Market Index
Source: WatchCharts
This move is not only concerning Rolex. In recent months, watch dealers and investors have flooded the grey market with once highly sought-after models such as Rolex Daytona, Patek Nautilus, and Audemars Piguet Royal Oak. As a result, the luxury watch market index compiled by WatchCharts, comprising 60 watches from the top 10 luxury watch brands based on transaction value, has seen a notable 16.9% decline in the past 12 months. Among the different brands, Audemars Piguet index is one of the worst performer, experiencing a 19.3% YoY drop, according to the latest data. Earlier, this year, Bloomberg reported Watchfinder & Co., the online pre-owned watch-selling platform controlled by luxury conglomerate Richemont, has decreased prices by about 15%.
Factors Explaining The Decline
According to the Boston Consulting Group, the positive financial performance after the Covid-19 pandemic has attracted new buyers, fueling market growth. Preowned watch sales reached $22 billion in 2021, accounting for nearly one-third of the overall $75 billion luxury watch market. In the meantime, secondary market retailers have gained increased prominence, and simultaneously, social media communities have emerged to exhibit watches and highlight their potential as valuable investments. It came as younger customers entered the market recently. They are usually less “personally attached” to their watches and treat watch buying more like the stock market, trading in their models when they see a good opportunity and closely monitoring the potential value of their acquired timepieces.
However, a combination of factors such as a slowing global economy, higher interest rates in advanced economies, and the crash in cryptocurrencies reduced demand for watches. In addition, Morgan Stanley flagged that supply exceeds demand when it comes to luxury second-hand watches, creating a downward spiral. In addition, several analysts suggest that Chinese owners were more inclined to sell their watches recently as the economy faced significant headwinds.
The market for secondhand watches, which was once flourishing, has witnessed a notable downturn in prices, undoing the surge that occurred during the pandemic. Several factors have contributed to this decline, including a rise in supply, a sluggish economy, increased interest rates, and the crash of the cryptocurrency market. Those who purchased luxury watches at the peak of the market in 2022 are now likely to encounter losses on their investments. As secondhand watch prices have reached their lowest point in almost two years, the market has undergone a significant transformation, signifying a new era for collectors, investors, and enthusiasts alike.
