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Luxury watches price index declines – should you be worried?

Luxury watches price index declines - should you be worried
Dino Kurbegovic

Over the course of the pandemic, the resale prices of luxury watches started rising steadily, peaking between March and April 2022. 

However, the party now seems to be coming to an end as the prices tumbled from $23,000 to below $20,000 in just the past three months as seen on the Watch Market Index (WMI). 

WMI April-June 2022. Source: WatchCharts

Namely, the overall WMI is an indicator of the secondhand watch market, created using 30 popular watch models with high trade activity. The Index shows the average price of these models over a specific period of time. 

This softening in the luxury watch market could be attributed to the declining sentiment in the broad global markets, inflationary worries, and the general deterioration of macro trends. Talks of a recession could be a further reason for falling prices, despite the huge run-up seen in 2021 and 2022. 

Watch models prices ‘pumped up’

Meanwhile, Paul Altieri, founder of Bob’s Watches, an online commerce site specializing in secondhand Rolex models, claims that he has seen the writing on the walls when it comes to the deflation of prices.

According to him, the high point of the market came when the Rolex Cosmograph Daytona Ref. 116500, a model introduced in 2016, which retails for $14,500, reached a high of $50,000 in secondary sales channels in May 2022. 

“All the models that were pumped up, overly hyped—those are the ones that have softened the most. If a watch was $10,000 in October and went to $15,000 by May, the fact that they’re back to $11,000 or $12,000, that’s where it should have been.” 

Crypto and supply chain issues

At the beginning of July, Bloomberg analyzed the drop in Rolex demand and prices along with the hit the cryptocurrency markets have seen recently. Despite the possible correlation, it is hard to fault the fall in Bitcoin’s (BTC) price for all the troubles, even as luxury watchmakers flock to accept Bitcoin.

Supply and demand issues are present in the watch markets as the process of their production requires scarce materials, which have been hit by supply-chain bottlenecks and rising prices. 

Yet, the shortage of these luxury items may help the prices remain stable, even though the investment thesis at these prices may seem curtailed to an extent. 

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