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Glut of Rolex, AP and Patek watches on secondary market suggests continued pressure on prices this year

Morgan Stanley sees continuing secondary market weakness in 2024.

Tracking secondary market prices and converting them into indexes that give a broad overview of trading is becoming more accurate, but is still distorted by data based on advertised prices in addition to actual transactions.

That might explain the reporting of a new year bump in prices for a handful of Rolex references at a time when hammer prices at online auctions are still falling.

These indexes also give little insight into the future direction of prices beyond a continuation of current trends.

For future forecasts, I pay close attention to the number of watches listed for sale at any time, because rising supply in conjunction with flat or falling demand, is certain to lead to prices falling.

Morgan Stanley uses the same trick to advise its wealthy clients, and even extends its analysis of the secondary market to suggest that rising supply, soft demand and the effect on prices from these market forces is a useful barometer for the health of watch brands in the primary market.

Secondary market supply morgan stanley

You can see the almost perfect inverse correlation between supply and prices on the secondary market, with a squeeze throughout 2021 and up to the first quarter of 2022, after which inventory being advertised rocketed as professional traders, flippers and the public started trying to sell before prices fell.

In the case of Vacheron Constantin, supply trebled inside six months. For Patek Philippe, Rolex and Audemars Piguet, the number of listings more than doubled.

2023 was far more stable with supply flat for Rolex (over the elevated levels of 2022), -2% for Patek Philippe, -10% for Audemars Piguet, and -14% for Vacheron Constantin.

“Inventory levels remain historically elevated, while similarly absorption rate (a measure of inventory turnover, defined as sold inventory/total supply over a given period) remains depressed compared to 2021 levels as a result of the increased supply,” Morgan Stanley suggests.

Secondary market age of inventory morgan stanley

Another indicator for future prices is a rise in the age of the watches being advertised, which was rising for the big three plus Vacheron Constantin last year.

Morgan Stanley analysts say that aging stock suggests some dealers may still be holding out on realising losses on older inventory purchased at higher prices, which may put further downward pressure on prices in the future if the urgency to sell increases.

In 2023, the median age of Rolex watches advertised on the secondary market increased by 25%, Patek Philippe inventory increased by 46% Audemars Piguets was up by +25% and Vacheron Constantin was relatively stable with a 4% rise.

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