The most expensive watches saw the sharpest declines. Rolex
The secondary market for luxury watches has fallen to its lowest level in over two years.
The Watchcharts market index is down 32 points from an all-time high in March last year.
Elevated interest rates and growing economic uncertainties could dampen demand for luxury watches.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
Since late 2022, predictions have mounted on Wall Street that the Federal Reserve’s rate hikes will hurt the US economy and the stock market.
But while the economy has generally held up surprisingly well, monetary policy intervention has triggered a downturn of a very different kind: a plunge in the luxury watch secondary market.
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The Watchcharts overall market index, which tracks the prices of 60 watches from top brands including Rolex, Patek Philippe and Audemars Piguet, is down 32 points from a peak in March 2022. A separate index just for Rolex models fell 27 percent over the same period.
The US Federal Reserve’s aggressive tightening of monetary policy over the past five quarters is believed to be the main reason for the slump in watch prices. Higher interest rates fueled fears of an economic downturn. They also prompted investors to rein in luxury spending and increase their savings. The downturn in the crypto market, also fueled by the rate hikes, has also impacted demand for watches.
The most expensive watches saw the sharpest declines
The most expensive watches suffered the sharpest declines. Watches in the $50,001 to $100,000 price range have plummeted more than 15 percent over the past 12 months. The $10,001 to $20,000 category was down 10.4 percent, according to Watchcharts data. The price range from 5,001 to 10,000 (about 4,500 to 9,000 euros) dollars recorded a minus of 6.8 percent.
Luxury watches have underperformed stocks since March 2022. At the time, the US Federal Reserve began raising interest rates. Since then, the S&P 500 index for large US companies has risen by about eight percent.
Certain chronometer brands felt this development more than others. The Rolex Market Index, which tracks the 30 most valuable models, fell 12.5 percent a year ago. The Patek Philippe index has lost 18 percent. However, Audemars Piguet posted the biggest losses, down almost 20 percent year-on-year, according to Watchcharts data.
Prices for luxury watches have nevertheless risen higher
When the “everything rally” was in full swing during the pandemic period, luxury watches were no exception. Excess money went into all sorts of alternative investments — like NFTs and meme stocks. Even opulent timepieces were swept away by the flood.
Rolex, Patek Philippes and Piguets prices hit record highs in early 2022. According to a report by the Boston Consulting Group (BCG), sales of pre-owned watches will reach $22 billion in 2021. That’s nearly a third of the $75 billion luxury watch market.
Despite the declines over the past year, prices have risen significantly higher over the long term, outperforming the stock market. The Rolex Index is more than 55 percent higher than five years ago.
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“Luxury watches have performed well, especially over the long term, compared to traditional asset classes. From August 2018 to January 2023, average pre-owned prices for top models from the three largest luxury brands, Rolex, Patek Philippe and Audemars Piguet, rose at a 20 percent annual rate, compared to an 8 percent annual rate, despite broader market declines during the pandemic for the S&P 500 index,” BCG said in a report released earlier this year.
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