Trying to find a precise date for when the financial world went to hell is difficult. Although the seeds were sown beforehand, the catalyst for the current cost of living crisis can likely be traced to February 24, when Putin decided to undo decades of de-escalation and also restrict the availability of food and energy in the west. Compounding with the lingering effects of Covid, domestic inflation and broken supply chains. Another recession seems inevitable, but what does luxury watch market analysis tell us about what an impending recession mean for luxury watch prices?
Well, the politically correct and non-fearmongering term being used is “market correction.” But the reality of that is “Rolex prices dropping.” Over the past few years, luxury watch prices have been rising consistently and considerably. Prices were driven up the pandemic as people had less outgoings in 2020 and 2021, leaving them with more pocket money to spend on watches. At the same time, major supply chain issues led to fewer watches being delivered, causing a scarcity in new watches.
Now though, because of the squeeze on costs people are starting to spend less on non-essentials. Meaning recent levels of price inflation are being reduced back towards reasonable levels. In short, prices are dropping.
Patek Philippe Nautilus 5711/1A-010 market price (April – June 2022) via WatchAnalytics.io.
The first watches that began to show signs of prices reducing were steel sports watches in the vein of the Patek Philippe Nautilus and Audemars Piguet Royal Oak. The discontinued Nautilus 5711/1A-010 had a market price of approximately £196,645 in March 2022, but just a month later it had dropped to £188,803. A near £10,000 drop in a single month is a substantial swing. The Royal Oak “Jumbo” contracted by roughly the same amount from £147,711 to £138,785. Which works out at an average 7.3% drop across the two models. However, since April these watches have continued to drop further in price by significant margins, the Nautilus now sits at £172,930.*
Patek Philippe Nautilus Ref. 5711/1A-010
However, while those hyper luxe watches saw the first major shifts, they were the proverbial canary in the mineshaft of luxury watch market analysis. Now, a large numbers of big names in luxury watches has been impacted. Including giants that seem untouchable like Rolex, with their prices dropping on the market even as they increase the price of direct sales.
The Rolex Daytona Ref. 116500’s market price has dropped from £48,570 to £44,069 since March 2022.
The vast majority of Rolexes are down on where they were in March with big ticket watches like the Daytona and Sky Dweller experiencing the biggest drops. The Daytona Ref. 116500’s average market price is down from £48,570 to £44,069. Looking at six key steel references in the Daytona, Sky Dweller, Submariner, GMT Master II, Yacht-Master II and Explorer II, Rolex has seen a price drop of about 9.2%.*
Omega Speedmaster Professional Moonwatch Ref. 311.30.42.30.01.005
However, not every brand has been affected to the same degree. Over the last 30 days Omega are only down on average by 2.4%. That’s largely due to models like the Speedmaster Professional Moonwatch Ref. 145.022 dropping by 8.2% to £5,774 and dragging the average down while a few models are actually up. For example, the Speedmaster Professional Moonwatch Ref. 311.30.42.30.01.005’s market price has actually increased over the previous month by 3.3% to £4,127. Arguably that’s more significant because that particular Moonwatch reference is currently the best-selling Omega.*
A side effect of the big brands struggling on the market is that people are turning their attention to alternative watchmakers. IWC, Cartier, Tudor and A. Lange & Söhne are all up by between 0.4 and 2.5% on average. Although, the amount of price growth has slowed compared to the last 12 months, indicating it’s only matter of time until they too experience substantial price drops.
What this all translates to in practical terms is if you’ve recently bought a watch as an investment, you should probably hold on to it for a while before flipping it. The watch bubble was nice while it lasted but as the impending recession worsens, things like Rolex’s prices dropping is likely to go further. A note of caution then for anyone thinking of making a watch investment, it may be riskier than you think.
*All prices and figures correct at time of publication. Sources:watchanalytics.ioandbeta.subdial.co.
