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High-end watch prices keep plummeting while broader luxury category rebounds

High-end watch prices keep plummeting while broader luxury category rebounds

Luxury retailers that rely on customers shelling out their hard-earned cash into luxurious items, which signal abundance, may be in trouble. Namely, high-end watch prices have plummeted since the last time Finbold reported that the index was falling.  

Some people tend to buy luxury watches as investments, but the resale prices have been falling steadily over the past week, according to WatchCharts. 

Meanwhile, the average resale price reached $18,076 on July 25, down over 20% since the peaks seen in March, completely wiping out the gains seen in Q1 of 2022. Patek Philippe led the decline in individual watch labels, dropping 16.4%, followed by Rolex, losing 13.6%, and Audemars Piguet losing 11% of their values. 

More popular models like the Audemars Piguet Royal Oak and Rolex Daytona saw declines of $20,000 and $10,000, respectively, in just one month.     

WatchCharts Market Index. Source: WatchCharts

Broad luxury category rebound

Moreover, any potential correlation that may exist between the prices of luxury watches and the pricing of other types of luxury goods seems to be moving in the opposite direction. Bank of America (NYSE: BAC) published a research note recently, indicating that the biggest tailwinds seen in 2021 and 2022 are the spending on luxury items.  

“Very strong demand from US luxury customers was the biggest positive tailwind in 2021. The strength has continued in 2022 despite a more complex macroeconomic backdrop. Higher-income consumer demand for luxury is accelerating, which we attribute to reopening and more purchase occasions (return of weddings, galas, holidays, etc.),” the bank said.

In addition, the return of tourists should further lift luxury spending in-store for numerous retailers, especially if China allows international travel once again as they have promised. Some forecasts see Chinese tourists spending roughly $41 billion on luxury items, in other words, a return to pre-pandemic levels. 

All in all, a continuation of positive developments in the luxury items sector seems inevitable, though time will tell just how many predictions will actually come true. 

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