Economic turmoil can be painful, but it can also create great opportunities.
For those who are eager to buy a particular luxury item, the market is headed its way.
Cheap is not the word to use when describing a luxury watch that costs upwards of $20,000. There is also no conflict in deals, even when prices are dropping and investors are starting, those in the Rolex Submariner or Patek Philippe Nautilus market have already made the decision to allocate five digits to the status code.
But, like anything else, the luxury watch market is also subject to the laws of supply and demand.
According to a recent observation by Morgan Stanley analysts, first reported by Bloomberg, an oversupply of people looking to resell some Rolex, Patek Philippe and Audemars Piguet models is causing a significant price drop.
So when can I get a cheap Rolex?
Between April and October, prices for a range of popular pre-owned Rolex models fell 21% on the flea market. Luxury watch tracker WatchCharts also reported a decrease of 19% for Patek Philippe and 15% for Audemars Piguet.
The three Swiss companies are among the top three luxury watch companies although Vacheron Constantin is also vying for a spot.
The drop in prices is due, at least in part, to a number of luxury watch owners who have noticed value growth in the past year and have brought their models to market. Doing so many people at the same time has increased supply compared to buyers who have both interest and purchasing power.
“We have observed a significant increase in watch stock in the general secondary watch market thus far as a result of used watch dealers and individual investors offloading their shares,” Morgan Stanley analysts wrote in the report, according to Bloomberg.
While the average price of $30,900 for a Vacheron Constantin Overseas sports watch is still a big drop from April’s $39,900, the group of people looking to weed out the average annual salary of many Americans is pretty small.
The model has a retail price of $22,500, but a waiting list of years makes used models more valuable than new ones.
During difficult times, many still look for luxury
In general, the luxury goods market was not particularly affected by events such as inflation and the war in Ukraine. While it declined somewhat during the early days of the pandemic, the global luxury goods market grew by nearly a third to $198 billion last year.
Shipping and resale can be a popular way for many to secure popular designer merchandise. Looking at resale numbers on eBay online shopping site (ebay) Data, luxury watch company Chrono 24 found that Kering (PPRUF) Gucci was the most well-known brand for selling second-hand products – in the three months leading up to September, 23,939 used Gucci items were purchased on eBay.
Rolex was in the top ten along with LVMH (LVMHF) Louis Vuitton, Burberry (BBRYF) and Tiffany & Co. (TIF) .
For those who know the luxury watch market and can wait for the tides to roll, the popular Patek Philippe or Rolex is usually a good investment. While the 30 most traded Rolex watches are down 8% last quarter, they’re still 21% more than they were in January 2021.
However, the current oversupply means that the wait for prices to rise again could be long.
“Given the current stock of watches for sale and the worsening overall background, we expect second-hand prices to contract onward by more than a quarter,” the note read.