Pre-owned luxury watch prices set to fall further as supply grows, says Morgan Stanley

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Prices for the most popular pre-owned Rolex, Patek Philippe and Audemars Piguet watches will fall further as the market has been flooded with supply, Morgan Stanley analysts said in a report.

After surging in 2021 and through the first quarter of the year, an index of Daytona chronograph maker Rolex’s most popular models tracked by WatchCharts has fallen 21% since the market peak in April.

Prices for the Nautilus maker’s most popular Patek Philippe references have fallen an average of 19% in the secondary market, while those of Audemars Piguet, the maker of the Royal Oak, have fallen 15% since the peak.

Prices will likely continue to fall due to a “dramatic” increase in supply, Morgan Stanley analysts, including Edouard Aubin, said in the report.

“We have noticed a significant increase in watch inventory in the secondary watch market since the start of the year due to second-hand watch dealers and individual watch investors getting rid of inventory,” said Morgan Stanley.

“Given the current inventory of watches for sale and the deteriorating macroeconomic backdrop, we expect second-hand prices to contract further quarter over quarter.”

The most in-demand models of the “big three” – Rolex, Patek and Audemars Piguet – account for 71% of the total value traded in the secondary luxury watch market.

Prices in the overall WatchCharts market index, which includes other brands, fell 9% in the third quarter of this year compared to the second quarter.

An example of the decline is the Vacheron Constantin Overseas, reference 4500V/110A-B483. The steel sports watch model, made by the Richemont-owned brand with a retail price of $22,500, peaked at $39,900 on the secondary market in April.

It can now be had for around $30,900, which is still a significant premium over retail.

According to the report, secondary watch market prices have declined less than many other asset classes over the past 18 months.

While pre-owned prices for the 30 most traded Rolex watches have fallen 8% this quarter, they are still up 21% since January 2021.

This compares favorably to the S&P 500 stock index which is flat while Bitcoin is down 34% over the same period.

Updated: October 15, 2022, 12:07 p.m.

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