Used Rolex prices seen benefiting from rate cuts: Subdial Index

PRICES for second-hand luxury watches from brands including Rolex, Patek Philippe and Audemars Piguet tumbled as the US Federal Reserve raised interest rates to cool soaring inflation, the Bloomberg Subdial Watch Index shows.

Now there’s reason for optimism that pressure may ease. The US central bank signalled on Wednesday (Dec 13) that its steepest round of hikes in a generation has likely come to an end. Lending costs could begin to decline next year with rate cuts expected, according to Fed chairman Jerome Powell.

A course reversal could spark a turnaround in valuations for used timepieces, said Christy Davis, a co-founder of Subdial, a UK-based secondary watch market dealer and trading platform.

“As we look towards 2024, the potential for a soft landing of stable and eventually declining rates is reason for optimism in the watch market,” he said.

The Bloomberg Subdial Watch Index, which tracks prices for the 50 most traded watch models by transaction value, has dropped about 10 per cent in 2023. It’s now at its lowest level in more than two years, following a surge that peaked in early 2022.

Demand for pricey used watches from the top Swiss brands soared during the pandemic as housebound consumers, flush with cash, snapped up fancy timepieces online. The frenzy cooled as borrowing costs rose, hammering demand for speculative assets.

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Watch prices slid the most between April and August of 2022, when the Fed implemented the biggest rate increases, Davis said.

While prices for the most in-demand watch models have fallen dramatically, watches including the Rolex Daytona, Patek Philippe Nautilus and Audemars Piguet Royal Oak, continue to trade hands on the secondary market well above retail prices. BLOOMBERG