High-end watch prices continue to fall as broader luxury category rebounds

Luxury retailers that rely on customers to spend their hard-earned cash on luxury items, which signal abundance, may be in trouble. Namely, high-end watch prices have fallen since Finbold last reported the index was down.

Some people tend to buy luxury watches as investments, but resale prices have fallen steadily over the past week, according to WatchCharts.

Meanwhile, the average resale price reached $18,076 on July 25, down more than 20% from the highs seen in March, completely reversing the gains seen in the first quarter of 2022. Patek Philippe led the decline in brands of individual watches, down 16.4%, followed by Rolex lost 13.6% and Audemars Piguet lost 11% of its value.

More popular models like Audemars Piguet Royal Oak and Rolex Daytona saw drops of $20,000 and $10,000, respectively, in just one month.

WatchCharts Market Index. Source: WatchCharts

Large rebound in the luxury category

Moreover, any potential correlation that may exist between the prices of luxury watches and the prices of other types of luxury goods seems to point in the opposite direction. Bank of America (NYSE: BAC) recently released a research note, indicating that the biggest tailwinds seen in 2021 and 2022 are spending on luxury items.

“Very strong demand from US luxury customers was the biggest positive tailwind in 2021. The strength continued in 2022 despite a more complex macroeconomic backdrop. Demand for luxury from high-income consumers is accelerating, which which we attribute to reopening and more shopping occasions (return of weddings, galas, vacations, etc.),” the bank said.

Additionally, the return of tourists is expected to further increase in-store luxury spending for many retailers, especially if China allows international travel again as they promised. Some forecasts predict that Chinese tourists will spend around $41 billion on luxury items, in other words, a return to pre-pandemic levels.

Overall, a continuation of positive developments in the luxury goods sector seems inevitable, although time will tell how many predictions will actually come true.

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