Are prices of watches going down?

By Andreea – Lucia Iavorenciuc

Ironically, while watches do tell time, there’s nothing more timeless than a watch on your hand. The problem is that watches tend to be very expensive. In the past, you needed to pay a hefty price to afford something like a Rolex.

However, in May this year, we saw a significant decrease in the value of a Rolex watch. Trade activity was reduced by 9.3%, and the overall value of a piece went down by an average of 20%. The theory is that the price growth over the past few years has become unsustainable.

But will this trend continue? Are the rumors true? Will you be able to buy a watch now, without having to spend a small fortune on it? Why exactly are the prices going down? We will find the answers to everything shortly.

Causes of the Watch Market Crash

Several things might cause the watch market to crash – and it doesn’t necessarily mean that the watches themselves are a problem. For starters, the stock market is the first thing that investors should be aware of. When you see portfolio value declining, it probably becomes clear to you whether you should buy that $15,000 watch or not.

Inflation also rears its head, as it does in most of our lives. As inflation is spiraling more and more out of control, our currencies are no longer worth as much. People aren’t choosing wants over their needs anymore – so, rather than buying a very expensive fancy watch, they go for something with a lower price tag. The demand decreases, causing the prices to go down.

The government restrictions also caused the luxury watch market to thrive. For the most part, watch prices began increasing in 2020, along with the first lockdowns. People were no longer able to travel and go on fancy vacations, which means they had a lot of money sitting around in their accounts. Many individuals decided to use that extra cash on product purchases – specifically, on watches.

Now, most travel restrictions are gone, and people are once more investing their money in their travels and social interactions. As a result, the demand for wristwatches has decreased, causing their prices to go down.

Last but not least, monetary relief was also one of the reasons why the watch market began to fluctuate. As the government provided funds to people who did not necessarily need them, that hole in the treasury added to the inflation. It also gave people the opportunity to buy more things that they required. Adding the demand with the average inflation – and culminating with the fact that the relief programs eventually stopped – people were no longer interested in buying overpriced watches.

Unsustainable Growth

Rolex as a brand produces around 800,000 new wristwatches every year – a number that was not enough to meet the current demand. This led to a fairly robust secondary market. With the pandemic frenzy, the luxury watch market reached an estimate of around $29 billion, causing many people out there to be very optimistic.

As people were buying more and more watches, sellers were listing numerous prices, increasing them week by week so that they could instill market confidence. That being said, the short-term increase resulting from the pandemic turned out to be unsustainable. This is why the wristwatch market is once more going back to the prepandemic grounds.

Indeed, it is expected that in the longterm, brands such as Rolex or Audemars Piguet will resume their previous trend and appreciate their value once the prices settle. The rate may be slower as compared to the past few years, but jewellers and watchmakers simply see it as “bringing it back down to earth”.

Will Watch Prices Keep Falling?

The watch bubble has begun to break as the average economy and demand are seeing a shift. This is why it is expected that wristwatch prices will continue to fall, as today’s economy cannot handle that demand. Jewellers and dealers are also putting too much pressure on themselves to get rid of the items that they have in the inventory, lest the drop will no longer support their first investment.

The problem is that for the inventory to be cleared, buyers must get the right incentive – which is usually a much lower price. This applies to the grey market as well at the moment, although this might change in the future through better inventories and honest pricing.

Should You Sell Your Watches?

People making jewellery investments might start wondering if now is the right time to sell a watch. The answer for that will only depend on your original purpose for buying the piece. Was it for something to enjoy, or was it an investment?

If the watch was bought simply as an investment, then the trends show that the prices for hot luxury watches will only go down. Selling it right now may seem like a sound investment – and chances are that buyers will be lining up for the less expensive watch. However, if the watch was bought as something to enjoy, it is up to you to decide whether you still like it or not and whether you’re better off without it.

The market is unpredictable, and just like the 2020-2022 bubble happened, prices may increase once more. By hanging on to the watches you purchased in the past or during this current drop, you might end up with some pieces that will appreciate greatly in the future.

The Bottom Line

Watch prices are going down right now, not because of the watches themselves – but because of the state of the economy. In a way, the pandemic bubble caused the watch prices to go higher – so now, things are returning to normal. Even as watch prices are decreasing, once everything stabilizes, luxury brands will begin to appreciate.