Are Prices of Luxury Watches Finally Falling?

Easy monetary policies globally combined with the relentless rising cost of goods material and inflation have spiked up demand for luxury watches around the world.

According to a research study, Rolex brand accounts for one-quarter of the entire Swiss watch industry’s annual turnover based on implied sales of CHF 8 billion in 2020.

As a result of these, prices for luxury goods have seen a significant double-digit increase since the start of the pandemic. If you think buying watches is just a wasteful hobby of the riches, you might want to think twice.

But like all assets that continue to go up swiftly, there is a time when fast might put a halt to the rise and prices might correct over time.

Watchmakers are usually careful when hiking prices of their goods because you don’t want it to become a commodity where it experiences the frequent up and down and discounts that were accustomed from purchasing customers with pricing power yet damaged image.

Sources mentioned that back in 2018, Cartier for instance, ended a two-year inventory buy back spree where it has purchased back EUR 500m worth of inventory in an effort to avoid damaging the the brand as a discounted item.

But prices are finally starting to crack a little since hitting the peak back in May 2022 this year, losing in about 5% from the previous month – at least that is what the data is showing.

Below is the Rolex Price Index history which shows 30 of Rolex most popular models and how it performs on the second-hand watch market.

It appeared that prices might have cooled off and just undergone a correction that it has never experienced before previously, and the much anticipated return to normal might have to do with the global uncertainty of potential recession that might impact companies around the world.

But still, with prices still up 18% year on year, this might just be a blip in the making.

Or it might have to do with competitors like Omega, AP, PP, Zenith that have become another desirable options for younger watch buyers.

Time to stock up some watches at home perhaps?