Are Watch Prices Falling? Top 5 Reasons NOT To Buy Now


Les 5 Principales Raisons De La Chute Des Prix Des Montres


Why the watch market is declining and why this is advantageous for collectors

The watch market is experiencing difficulties, but did you know that this is good news for the watch industry? Learn about the internal and external factors that could cause the watch market to collapse as well as what it will look like afterward.

The Situation On The Watch Market

It’s not hard to see that the watch market has been, to put it mildly, tumultuous. Watch prices have been greatly inflated and are currently falling even more quickly than they were rising.

Currently, there is a perfect storm of internal and external factors that could cause the watch market to fall. These factors include grey market investors, inflation, and confidence in the global markets.

All of that may appear to be awful on the surface, but consider “Who is this bad for?” One can contend that the elements responsible for the bubble will suffer the greatest losses and be driven out of the market.

The average watch collector who exercised patience over the past three to four years is now in the best possible position since they can now wisely purchase watches, like Rolex, from authorized dealers or purchase pre-owned watches at fair costs.

History often repeats itself, and anyone with a memory may quickly recognize this. The watch market has been increasing and has kept rising, much like the 2008 housing crisis, with many market participants assuming as though this is how the market will always function.

As usual, a correction will come at some point, and if it does so in a volatile market, crashes are sure to follow.

Stainless steel Rolex watches are selling for three times their MSRP, stainless steel Patek Philippe Nautilus watches are selling for five to thirty times their MSRP, and there are too many additional models to list. In this essay examining the decline of the watch market, we’ll list the various elements influencing the current watch market and where we believe the market is headed.

External Factors Affecting The Watch Market

The watch market’s decline has the following external causes:

  • Stock Exchange
  • Inflation
  • Governmental Restraints
  • Financial Assistance Programs

Stock Exchange

When spending bigger sums of money, a person’s general financial confidence is crucial. Making the choice to purchase a $15,000 watch seems very obvious when portfolio values are dramatically decreasing for the majority of people throughout the world.

The largest external factor influencing the watch market, in our opinion, is the stock market.

Inflation

When deciding between wants and needs, a person’s purchasing power is important. Our currencies lose value as inflation continues to spiral out of control.

This makes the distinction between needs and wants much clearer, and the current state of the watch market is proof of that. Inflation-related price increases have reached such high levels that the free market is beginning to push back by decreasing demand for the watch business.

Government limitations

Travel restrictions were generally enacted by all governments during the recent pandemic. That meant fewer vacations for many middle- and upper-class people, which led to more money building up in their bank accounts.

It was obvious that a large portion of that money, which would have otherwise gone toward other things, found its way to the market for upscale items. Since international travel is once again unrestricted by government regulations, the demand for wristwatches won’t rise any further.

Financial Assistance Programs

Whatever you want to call it, the financial assistance programs provided many people with free money who didn’t genuinely need it. We’re not talking about folks who are barely scraping by; rather, we’re talking about a sizable percentage of the population that received monies even though they weren’t in need of them.

All that extra money helped fuel inflation and raise demand in numerous industries, including watches.

Internal Elements Affecting The Watch Market

The following internal factors contributed to the decline of the watch market.

  • External investors
  • Increasing Demand
  • Smart Money

External investors

During the pandemic and lockdowns of 2020, when industry sectors became unknowable, investors resorted to different locations to earn a return on their investment. Early on, it was recognized that the market for luxury products was one that experienced rapid growth after individuals were prohibited from using their money in typical ways.

This attracted numerous outside investors who were more interested in their own financial gain than the interests of the watch community. As a result of the market’s recent decline, the outside investor is now suffering from his own success.

Many people are thought to have over stretched themselves and are currently forced to sell off inventory in order to satisfy forthcoming obligations or to reduce their losses. This economic habit frequently results in fast runs or inventories at steep discounts.

Increasing Demand

There have been obvious indicators that sellers have been squeezing the supply of many popular watches, whether it is from external investors, historical jewelry retailers, or private watch dealers. You might be curious as to why someone would do this.

Because of this, demand and prices will increase if the supply is reduced, with the intention of making the restricted model into a  “investment watch.” When this is carried out on a large scale, the outcome is that stainless steel watches sell for quadruple MSRP and that there are no watches from some brands, like Rolex, in any of its authorized dealers.

Dealers are increasing supply now that prices have begun to decline, which inevitably drives up prices because everyone has inventory that needs to be sold before prices go too low.

Smart Money

I’m happiest when I think about the internal power driving the 2022 watch market. It appears that consumers are beginning to become more savvy and stop playing into the hands of the games played by the pre-owned market or authorized dealers.

It takes two to tango, and when buyers have had enough of paying too much, prices will inevitably fall. Let’s wait and see how much consumers can reduce prices by choosing not to purchase particular timepieces.

Why a Watch Market Crash Is Beneficial

The market circumstances were unsustainable at the height of the watch market. Prices quickly spiraled out of control as collecting gave way to investment.

I think I can speak for the majority of watch aficionados when I say that we would prefer to do business in a market where we could purchase the watches we wanted without having to wait on a list, buy other watches to get the ones we wanted, or pay exorbitant rates on the used market.

With the hard-earned money we have saved, we can all return to collecting watches and purchasing the timepieces we want.

We anticipate that this entire experience will help brands better assess the demand for their products. They have been able to internally justify increasing output if necessary because they have seen the stress test of their product prices for years.

Most Frequently Asked Questions

Will the cost of watches keep dropping?

Because of the current situation of the economy and the pressure on dealers to get rid of inventory, watch prices are predicted to fall.

Will there be no more “grey market”?

No, the black market won’t disappear. Pre-owned timepieces will always have a demand, and the grey market can be quite useful for distributing supply around the world.

It is anticipated that the grey market will behave differently, reflecting more ethical pricing and inventory management practices.

When will Rolex be shown in cases at AD’s?

Rolex watches will start to be more widely available in cases at Rolex authorized dealers, according to our prediction. Rolex has been increasing production efficiency, and ideally by that time, foreign investors will find other places to park their cash.

As a result, the market for Rolex should be more stable for consumers.

Is now the ideal moment to sell your watch?

Whether you purchased it as an investment or for personal enjoyment will depend. We think the prices on hot models are only going to go down, therefore now would be a good time to sell if someone acquired it as an investment.

Only the person who purchased the watch for their own enjoyment will know when it’s time to sell.

Read More About Our Picks: 7 Affordable Swiss Watch Brands HERE

Read More About the History of Watches and popular luxury brands such as Rolex and Omega

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