During the pandemic, resale prices for luxury watches began to rise steadily, peaking between March and April 2022.
However, the party now appears to be coming to an end as prices have fallen from $23,000 to under $20,000 in the past three months alone, as measured by the Watch Market Index (WMI).
Namely, the global WMI is an indicator of the second-hand watch market, created using 30 popular watch models with high trading activity. The index shows the average price of these models over a specific period of time.
This slowdown in the luxury watch market could be attributed to declining sentiment in major global markets, inflation concerns and general deterioration in macroeconomic trends. Talk of a recession could be an additional reason for the price drop, despite the huge acceleration seen in 2021 and 2022.
Prices for watch models “inflated”
Meanwhile, Paul Altieri, founder of Bob’s Watches, an e-commerce site specializing in pre-owned Rolex models, complaints he’s seen the writing on the walls when it comes to price deflation.
According to him, the high point of the market came when the Rolex Cosmograph Daytona Ref. 116500, a model introduced in 2016, which sells for $14,500, peaked at $50,000 in secondary sales channels in May 2022.
“All the models that have been inflated, over hyped, they’ve been the ones that have mellowed the most. If a watch was $10,000 in October and went to $15,000 in May, the fact that it went back to 11 $000 or $12,000 is where it should have been.
Crypto and supply chain issues
Early July, Bloomberg to analyse the decline in demand and prices for Rolex as well as the blow that the cryptocurrency markets have experienced recently. Despite the possible correlation, it’s hard to blame the falling Bitcoin (BTC) price for all the problems, even though luxury watchmakers are flocking to accept Bitcoin.
Supply and demand issues are present in watch markets as the process of their production requires scarce materials, which have been affected by supply chain bottlenecks and rising prices.
Still, the scarcity of these luxuries may help prices hold steady, even if the investment thesis at these prices may seem cut short to some extent.
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