• An index that tracks the price of Rolex watches fell 5% in May after a bumper year of gains.
  • WatchCharts founder Charles Tian said watch sellers asked for “very optimistic” prices in February.
  • Despite the decline, luxury watches still outperform stocks or cryptocurrencies in 2022.

The luxury watch resale market caught fire earlier this year, but it looks like it’s been taking a dose of cold water in recent months.

A price index that tracks 30 patterns with high trading activity fell 9.3% in May after peaking in April. Even the Rolex brand index, which tends to hold a very high level of value, fell 5% in May.

In January and February of this year, although prices continued to rise, we saw a decrease in quantity [sales] WatchCharts founder Charles Tian told Insider.

“It has certainly created this misperception that the market is higher than it actually is,” he added.

Relative to other asset classes, Rolex performed fairly competitively in the year leading up to March 2022, with certain models such as the Daytona outperforming the S&P 500.

Rolex produces about 800,000 new watches annually – nearly insufficient to meet current demand – resulting in a strong secondary market. Then the pandemic sparked a frenzy for second-hand luxury watches, which McKinsey estimates will exceed $29 billion by 2025.

“There were definitely some people who were quoting prices very optimistically and constantly increasing prices week by week to boost confidence in the market,” Tian said.

The drop in watch value over the past month follows a tough season for nearly every asset type, with the S&P 500 losing about 20% of its value and Bitcoin dropping by more than a third.

Like many other assets, Tian said, the pre-owned watch market has seen a mix of new collectors interested, investors looking for alternative asset classes, and a healthy dose of speculation that has driven up prices.

“I think this short-term rapid increase that we saw from late last year through April of this year was not sustainable, and I think it had to come down a bit to the ground,” Tian said.

In the longer term, Tian expects Rolex and other high-end brands like Audemars Piguet and Patek Philippe to resume their decade-long trend of increasing value, albeit at a slower pace than the past two years.

“What we’ve seen over the past few months brings her down to earth a little bit,” Tian said.

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