Good news or bad news for you? The "abnormal bubble market" for popular pre-owned watches is over!

"Will the market return to normal now?" While luxury watches remain popular, with rumors of a global economic recession circulating, the price of popular pre-owned watches is clearly falling. And when we look into the reasons for this price drop, we can see the current state of the global economy. This is good news for those who want to get their hands on a popular pre-owned watch. But it's bad news for those who already own one. So, which one are you?

The market price of used popular watches has continued to fall

　Even if a particular model from a popular brand is out of stock and unavailable, if you go to a pre-owned watch specialty store, it will still come with an outrageous price tag of more than three times the retail price! However, as the "COVID-3 bubble" has subsided, this situation seems to be finally coming to an end.

　You're interested in pre-owned watches and are looking for your favorite model. You want to check the secondary market price of the model you currently own and sell it if you can get a good price. If you're someone who regularly checks watch market sites like Chrono24, you're probably aware that the price of pre-owned models from popular brands has been falling since last year.

　So you might be thinking, "I already know that." That's true. But when did the decline begin? Why did it happen? There's hardly any objective data. However, that doesn't mean there's no data at all.

　So, this time I would like to share my own views and explanations on the two questions of "When did the decline begin?" and "Why did it begin?" while introducing some sites that I am paying attention to.

Will the turning point be around February 2022?

　What I'm focusing on in my used watch market watch is the "MARKET" page of the UK used watch market site "SUBDIAL," which was mentioned at the beginning of this column. Those who subscribe to Bloomberg's paid site, like me, may be familiar with it. However, while this page is currently accessible to anyone, it shows the market prices for used watches in the UK, not Japan.

Subdial has collaborated with Bloomberg to monitor the top 50 popular pre-owned watch models and publish a unique score called the Bloomberg Subdial Watch Index based on price fluctuations.

　Looking at this score and other information from overseas media, it seems likely that the prices of many popular pre-owned watches peaked and began to fall in the spring of 2022, around February to March 2022, just before "WATCHES AND WONDERS GENEVA 2022" was held in person in Geneva for the first time in four years.

　This period coincided perfectly with the huge debt crisis of China Evergrande Group, a major Chinese real estate developer, which led to the collapse of the Chinese real estate bubble. It was also around this time that information circulated in some media outlets watching China that popular used watches were being sold in large quantities and prices were falling.

Is China's economic crisis the main reason for the price drop?

　Anyone who follows watch market sites knows that Chinese people have dominated the used luxury watch market, including high-end collector's items, since 2010. And, while this is merely my speculation, I believe the main reason for the recent price drop is that Chinese people, who were once the main players, have sold off the popular used watches they previously purchased in response to the economic crisis in China caused by the collapse of the real estate bubble.

　As a result of the implementation of strict "zero-COVID policies" in response to the COVID-19 pandemic, including city lockdowns, the Chinese economy has rapidly slowed and is now in a state of deflation, according to recent Chinese economy watchers. The zero-COVID policies were rescinded in the latter half of last year, and the watch industry predicted that watch sales in China, which was the world's No. 1 market before the COVID-19 pandemic, would return to normal. However, watch sales in mainland China and Hong Kong have not recovered. The reason is that the Chinese economy has fallen into a state of deflation similar to Japan's in the 1990s. As a result, fewer people can afford to buy expensive watches.

　Of course, these actions by Chinese people are not the only cause of falling prices. For some reason, Japanese television and newspapers are not actively reporting on this issue, but there is no doubt that economic recessions are occurring not only in China but in all regions of the world.

　The wealthy, especially in Japan, have a strong appetite for luxury watches. However, and I should point out that this is just my personal impression, I have already seen a lot of feature articles on "affordable but good watches" appearing in overseas watch-related online media over the past year. I've also heard that sales of ultra-expensive models are starting to slow down in the United States, which has overtaken China to become the world's No. 1 market for Swiss watches.

This decline is a kind of "normalization"

　So, according to the "BLOOMBERGE SUBDIAL WATCH INDEX," which is calculated by aggregating the prices of used watches from popular brands and popular models, how does the current market price compare to the past?

　Looking at the fluctuations in this indicator, prices soared from around November 2021 to February 2022. Then, in February, the market peaked, hitting its highest value, before suddenly declining and now almost back to the level before the price surge. In other words, as mentioned at the beginning, it can be said that the "abnormal bubble market" has, for the time being, converged back to normal.

　This situation is both good and bad for watch collectors. It's undoubtedly good news for those searching for the watch they want on the pre-owned watch market, or those considering buying a pre-owned watch. However, it's also bad news for those who currently have a popular watch they want to sell—in other words, those who want to make a profit by buying a pre-owned watch as an investment, or those who own a popular model from a popular brand and are satisfied with its value.

You can't make a good watch without being serious!

　Either way, I think this recent drop is a great opportunity to distance yourself from the boom and calmly reassess the value of watches and your own values ​​regarding watches. The people who make "truly good watches" that you won't tire of over the years and that can be enjoyed across generations with proper maintenance are, in a word, serious people. You can't make such watches without seriousness. That's the same with cameras, because that's what precision machinery is all about.

　I experienced the Heisei bubble when I had just started working. Perhaps due to my suspicious nature, I was unable to weather the bubble. What I learned at the time was that during a bubble, people's perceptions and evaluations of things become distorted; the "lens" through which they view things becomes distorted. They become distorted when caught up in trends. I believe this decline is a golden opportunity to correct those perceptions, to "correct the distortion in the lens."