Will Rolex Prices Keep Falling?

Will Rolex Prices Keep Falling?

The two biggest stories in 2022 were the MoonSwatch becoming an overnight sensation and the other was the huge movement in preowned Rolex prices. These are both interesting examples of how quickly the market can change due to trends and belief in those trends. Let's take the MoonSwatch first. Swatch took one of the, most popular Omega watch and made it available for a fraction of the cost. Whilst there was obviously trade-offs with materials, movement etc you still got a Speedmaster style watch for around £250. As well as Omega or Swatch fans buying the watch because they want it there was also people who bought into the hype built around it.

 

 

 

Streets in London had to be shut because of crowds forming outside of Swatch shops and they were selling online for three times retail. A watch which, whilst always going to popular, probably wouldn’t be constantly sold out if not for the hype narrative around this particular release. With little sign of slowing down anytime soon, something similar happened to the preowned Rolex market.

 

The preowned Rolex market changed due to the ongoing economic issues brought on in the wake of Covid-19 with prices naturally falling. In response two narratives formed, one from sellers and one from buyers. Some were saying you should buy the dip and others saying you should hold out until the market bottoms out, you can probably guess who was on what side. The truth is looking back the tumble was mostly fuelled by the big-ticket Rolex’s. Specifically, ‘hype’ watches which are popular on social media. Take for instance the Tiffany Dial Oyster Perpetual which has tanked in value over the past year and even some tried and tested watches like the Daytona have struggled to hold it’s value. As an example, from CWBC we got offered a 2021 Daytona for £22,500 earlier this year but we didn’t feel comfortable taking it in at that price as we believe the watch is still falling. This was when Daytonas were still on paper worth £35,000, around March, and yet have sunk since then. We believe that the Daytona’s will settle just below £20,000 market value around £19,000 depending upon specific reference and condition. This is still forty to fifty percent more than retail so still a strong model overall.

 

 

 

If you look at a five year graph charting Rolex prices (all info is independently verified from watchcharts.com) the market is roughly where it was in the summer of 2021. However, the sharp rise has been followed by a deep drop, boom and bust in effect. The long term trajectory is still positive on average so people who think long term will have more security, the real big losers in this drop are 'flippers'. If you look at short terms graphs covering twelve and six month periods whilst the drop is undeniable what is also clear is the market is starting to settle. Whilst some models will still fall, to go back to the Tiffany Dial Oyster Perpetual which will drop more. Only buy that watch if you want to keep it and don’t mind paying a premium. For other models though such as the Submariner, Datejust, GMT you will probably find that the market has righted itself and there will only be modest increases or decreases in value in the immediate future.

 

 

 

 

Looking forward there’s lots of possible movement in the market due to outside influences, namely recession and recovery in a macro economic sense but inside there are industry specific factors. Namely the certified pre owned Rolex scheme. We have previously said, along with others, that the purpose of this scheme is to prop up the preowned market and keep Rolex’s desirable and difficult to buy. For those who haven’t seen Rolex will know permit their ADs to sell second hand Rolex’s with approval and certification from Rolex. This removes any risks of the watch being fake but it does come with a hefty price tag. Bucherer were the first group to list certified pre owned watches and their prices are significantly more than the current market value. With many listed at twenty five percent more than market value and others more than double. They seem so expensive that it works out cheaper to buy a preowned Rolex from a trusted seller and get it serviced by Rolex to get the service papers which act as proof of authenticity.

 

Whilst some people will unquestionably buy certified preowned many will either be priced out or simply refuse to spend double market rate for a piece of paper from Rolex. Especially as they can get the piece of paper for less if they service the watch through an AD themselves. That means whilst dealers will have to sell for less than certified they can keep prices up and this downward trend will abate. Rolex threw a life line to the preowned market by using this programme to inflate the prices of their watches. So, whilst it is difficult if not impossible to spot trends ahead of time, if I had to guess I would say there’s lots of potential growth in the Rolex market.

 

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