Prices for Patek Philippe, Rolex and Audemars Piguet watches continued to fall on the secondary market in the third quarter, extending a slump since a peak at the beginning of April.
The most recent quarterly report by Morgan Stanley, with data contributed by WatchCharts, shows prices across all Patek Philippe and Rolex watches falling by 8% and for Audemars Piguet the quarter on quarter drop was 7%.
The overall performance for brands is significantly distorted by a handful of references, mostly those discontinued over the past year, which rocketed in value prior to the beginning of April.
These include discontinued models from the Rolex Oyster Perpetual family, Patek Philippe’s blue dialed Nautilus 5711/1A-010 and Audemars Piguet’s classic blue dialed Royal Oak 15202ST.
However, Morgan Stanley’s report singles out the rise and fall in prices for references that are still part of the leading brands’ collections.
For example, the steel Rolex Cosmograph Daytona 116500LN saw its price peak at $47,400 before falling 31% to $32,600. That is still more than double its retail price at authorised dealers.
The black dialed Audemars Piguet Royal Oak 15500ST.OO.1220ST.03, which is still in the collection, peaked at $69,100 — almost three times its retail price of $26,600 — before falling back to $50,500 at the end of September.
Interestingly, prices have been rising for some of the lower volume brands.
Between Q2 and Q3, Girard-Perregaux, a company recently bought from luxury group Kering by its management team, saw prices rise by 5% on the secondary market, which Morgan Stanley attributes almost entirely to the popularity of its Laureato range.
A. Lange & Sohne prices rose by 3% and Bulgari models rose by an average of 1% on the secondary market.
Sporty luxury watches with integrated bracelets have been the key driver of demand for a number of years, but prices peaked for the Patek Philippe Nautilus, AP’s Royal Oak and Vacheron Constantin’s Overseas earlier this year.
All three families are still selling at well above their retail prices and well up on a year ago when the surge in prices on the secondary market gathered pace.
GP’s Laureato and Lange’s Odysseus have been the best performers over the full year to the end of September, with prices up 33% and 30% respectively.
Morgan Stanley’s research paper advises investors that it expects the decline in prices on the secondary market in Q2 and Q3 to continue into Q4, but adds, “There is, for now, no cause for alarm for three key reasons. First, nearly all asset classes are down so far this year but the market for second hand watches is actually down less in comparison to others. Second, relative to history, second hand prices are currently at a healthy level vs. the prices of new watches. Lastly, price contraction has been (so far) very orderly considering the dramatic increase in supply — a function of the fact that demand has remained strong.”
The supply issue is analysed in the report, with the three most traded brands, AP, Rolex and Patek Philippe, all seeing the volume of watches hitting the secondary market almost doubling from the start of the year.