UK energy prices and Rolex demand...

[Lewi777]

Being on a fixed rate energy tarrif for the last year, the UK energy crisis has largely passed me by, but now I'm coming off that fix I've been offered a renewal. The cheapest new fixed rate for our circa £5k ($7k) energy bill is now £16K ($22K) a year. That's a Rolex a year for the next couple of years at least.

I've been dismissing talk on here of this causing any dent in UK demand, but I do now wonder if this, combined with inflation accross the board might actually be more significant that I'd realised and may very well dampen demand, at least in the short term. I hadn't realised how much energy was going up; a 200+% rise is probably going to cause some here in the UK at least to review that Rolex purchase.

We live in an old, inefficient house with a gas AGA of all things, so we're probably about as bad as it gets in the UK for energy ratings, but I'm thinking of all those big old independent schools that are going to get enormous energy bills, which may very well have to be passed on to those middle-class Rolex buying parents. Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

[joli160]

I doubt it, if you have 10K spare for buying a luxury and more or less a useless product you certainly don’t have to worry about costs of energy

[johnwigan]

Originally Posted by Lewi777

Being on a fixed rate energy tarrif for the last year, the UK energy crisis has largely passed me by, but now I'm coming off that fix I've been offered a renewal. The cheapest new fixed rate for our circa £5k ($7k) energy bill is now £16K ($22K) a year. That's a Rolex a year for the next couple of years at least.

I've been dismissing talk on here of this causing any dent in UK demand, but I do now wonder if this, combined with inflation accross the board might actually be more significant that I'd realised and may very well dampen demand, at least in the short term. I hadn't realised how much energy was going up; a 200+% rise is probably going to cause some here in the UK at least to review that Rolex purchase.

We live in an old, inefficient house with a gas AGA of all things, so we're probably about as bad as it gets in the UK for energy ratings, but I'm thinking of all those big old independent schools that are going to get enormous energy bills, which may very well have to be passed on to those middle-class Rolex buying parents. Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

Yes, indeed. As part of a whole range of cost of living increases, and tax increases coming down the line. The government will end the massive economic stimulus. Covid is finally coming under control, and normality will return to the economy.

Production/supply problems caused be COVID will be resolved.

The bill for the gigantic government spending will become due.

Currently, UK house prices at record levels, share prices sky high, inflation etc etc.

There will be a downturn which will hit people - impossible to say exactly when, but it is coming.

Rolex is increasing prices. And Rolex is building and will increase production.

If you can get a crazy price for your 'investment piece' Rolex, now is the time to sell. People paying crazy prices, thinking prices never go down, will learn the hard way that what goes up can also go down. There is no magic money tree, alas.

Personally, I'm looking forward to things returning to normal, and I am prepared for it. Being able to walk into an AD and walk out with the watch you want, going on holiday again, can't wait. Would not wish economic misfortune on anyone, but I suspect it is coming. Being prepared is the best course of action. Looking at what is coming ahead, rather than in the rear view mirror, is the way to avoid ending up a mangled wreck.

Interesting times indeed. What will people in future think of crypto crapcoin, NFTs etc. A madness that descended on people? Or are people able to conjure up wealth from nothing? Just find a bigger fool than you, to pay more than you did, ad infinitum. I know what I think.

[johnwigan]

Originally Posted by joli160

I doubt it, if you have 10K spare for buying a luxury and more or less a useless product you certainly don’t have to worry about costs of energy

Ha, I couldn't disagree more. Look at at what happened in previous downtowns.

[Harry-57]

If a hike in energy costs, even a big one will affect someone's ability to buy a luxury watch, they probably shouldn't be buying one in the first place. And they certainly won't be buying one in the near future. How much of this type of thin margin or credit assisted spending accounts for Rolex sales? I'm thinking we won't see so much as a blip. But we'll find out soon enough.

If the energy situation puts a spike in the mass appeal and cools the demand, the rich people who can casually drop £10-20k on something frivolous, or 2-3 times that in the grey market, will benefit from the better supply and lower prices. Someone always does badly while someone else does rather well. It's the same with property. A market crash is the wealthy invertors' fire sale.

We're going storage battery and solar this year and next year. The aim is to Run an EV from solar generated power and store left over and off peak power as much possible. As for my next Rolex purchase, my name is on the list and the money is already set aside. I could do with a higher interest rate on the saved money and this is likely to happen over the 2+ years it will take for my watch to turn up. Or maybe less than 2 years if the buyers fall away, which I doubt they will.

[Lafaiete]

I did wonder the same.

A lot of people with their names on the list, might quietly pass when they get a call from the AD. It’s okay saying that you are paying RRP for a watch that is selling for 2 x RRP. But selling it is not always straightforward and some might not want to take the risk.

[Lewi777]

Originally Posted by joli160

I doubt it, if you have 10K spare for buying a luxury and more or less a useless product you certainly don’t have to worry about costs of energy

Well you say that, but ... compared to a few days ago, I need to now find an extra £22K for gas and electricity over the next two years and then I'm thinking that we probably need to swap out the AGA for a more efficient cooker, that's another £6k-ish and probably time to consider a new boiler as well (£7k) some solar panels perhaps £10k etc. I think these are all perfectly sensible purchases in the current climate. Now, I'm playing devil's advocate here a bit as I doubt we'll do all that, but I'm setting a scene of perhaps changing priorities around the corner.

I personally think that the typical UK Rolex buyer will be noticing this too soon, if not already. Someone in the UK who has a spare £10K now for a watch may no longer have that in a year or two when the AD calls.

[Lewi777]

Originally Posted by Harry-57

If a hike in energy costs, even a big one will affect someone's ability to buy a luxury watch, they probably shouldn't be buying one in the first place.

Absolutely agree. But I reckon the UK "waitlists" are going to be full of these people. I'm not saying it will happen now, I'm thinking that in a year or two there may very well be a dent in demand in the UK. Of course Russia many not invade the Ukraine, energy prices might fall, inflation ease and it's all a storm in a teacup. I keep saying UK, because we seem to be in a uniquely bad position (as always!)

[Sandpit]

Originally Posted by joli160

I doubt it, if you have 10K spare for buying a luxury and more or less a useless product you certainly don’t have to worry about costs of energy

You know a lot of people still buy stuff on credit, and that includes watches. Yes in theory people should buy with spare cash, but that simply isn’t the reality. Every man and his dog owns a Rolex now.

[Anton911]

Originally Posted by Lewi777

Being on a fixed rate energy tarrif for the last year, the UK energy crisis has largely passed me by, but now I'm coming off that fix I've been offered a renewal. The cheapest new fixed rate for our circa £5k ($7k) energy bill is now £16K ($22K) a year. That's a Rolex a year for the next couple of years at least.

I've been dismissing talk on here of this causing any dent in UK demand, but I do now wonder if this, combined with inflation accross the board might actually be more significant that I'd realised and may very well dampen demand, at least in the short term. I hadn't realised how much energy was going up; a 200+% rise is probably going to cause some here in the UK at least to review that Rolex purchase.

We live in an old, inefficient house with a gas AGA of all things, so we're probably about as bad as it gets in the UK for energy ratings, but I'm thinking of all those big old independent schools that are going to get enormous energy bills, which may very well have to be passed on to those middle-class Rolex buying parents. Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

Not being funny,what are you heating,The Houses of Parliament or Windsor Castle !

[Sandpit]

Originally Posted by Lewi777

Being on a fixed rate energy tarrif for the last year, the UK energy crisis has largely passed me by, but now I'm coming off that fix I've been offered a renewal. The cheapest new fixed rate for our circa £5k ($7k) energy bill is now £16K ($22K) a year. That's a Rolex a year for the next couple of years at least.

I've been dismissing talk on here of this causing any dent in UK demand, but I do now wonder if this, combined with inflation accross the board might actually be more significant that I'd realised and may very well dampen demand, at least in the short term. I hadn't realised how much energy was going up; a 200+% rise is probably going to cause some here in the UK at least to review that Rolex purchase.

We live in an old, inefficient house with a gas AGA of all things, so we're probably about as bad as it gets in the UK for energy ratings, but I'm thinking of all those big old independent schools that are going to get enormous energy bills, which may very well have to be passed on to those middle-class Rolex buying parents. Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

Very interesting post. £5k alone is some bill to start with!

The next year or two will be interesting to watch. I’m not going to start making predictions on watch prices but I think, generally, people are going to find themselves with less free cash with inflation, energy prices and also I think interest rates will continue to rise.

A lot of people are heavily “invested” in these little objects we put on our wrists. If a time comes where people need cash or want to get their investments back, then in theory we should see more stock (mostly used I’d say).

Let’s see what happens.

[rambo99]

Originally Posted by Lewi777

Well you say that, but ... compared to a few days ago, I need to now find an extra £22K for gas and electricity over the next two years and then I'm thinking that we probably need to swap out the AGA for a more efficient cooker, that's another £6k-ish and probably time to consider a new boiler as well (£7k) some solar panels perhaps £10k etc. I think these are all perfectly sensible purchases in the current climate. Now, I'm playing devil's advocate here a bit as I doubt we'll do all that, but I'm setting a scene of perhaps changing priorities around the corner.

I personally think that the typical UK Rolex buyer will be noticing this too soon, if not already. Someone in the UK who has a spare £10K now for a watch may no longer have that in a year or two when the AD calls.

almost 1k pounds bill a month just for gas and electricity?!

[Lewi777]

Originally Posted by Anton911

Not being funny,what are you heating,The Houses of Parliament or Windsor Castle !

Tell me about it! It's a fairly large house, but it's the gas AGA that is the main culprit. It's basically like leaving all your gas hobs on 24/7. But there are a load of house in Kent like ours with AGAs. They're stupidly inefficient, but lovely to lean on and the dogs love it! We've been meaning to get rid of it for years but it's a pain as it's connected to our hot water. Anyhow ... I digress. I know we pay more than most for energy for sure.

[TimepieceRPP]

I doubt it as the so called list is based on your spending power, not first come first serve, those who are "lucky" to be called are VVVIP and can spend a lot, and it won't affect their buying power at all.

[Lewi777]

Originally Posted by TimepieceRPP

I doubt it as the so called list is based on your spending power, not first come first serve, those who are "lucky" to be called are VVVIP and can spend a lot, and it won't affect their buying power at all.

And they buy all the Rolexes in the UK? I doubt it very much.

I've seen a shed load of Rolexes on UK wrists (I worked in finance and investment banking a lot) and I promise you they are not "that" wealthy. I know their salaries :)

[Oxfordian]

I’m skint, I am just finishing adding the final touches of furniture decorations etc to our new home, so at the moment the watch pot has been drained on the house move, solicitors fees, removal fees and the over rated over priced estate agent fees.

That energy costs are going to rise isn’t helpful but discussion with the new home’s energy supplier indicate that as per usual the British press have exaggerated the forthcoming price rise just a bit, actually a big bit and the rise isn’t going to be as bad as the tabloids would have us believe.

However there is no doubt that the UK is going to be a more expensive place to live for the foreseeable but I don’t see that stopping people from buying luxury goods, if you were planning a new watch / jewellery purchase then you have the funds for that, any increase in tax, cost of credit, cost of energy etc isn’t going to impact that much.

The people that may bail on buying a new watch are those who may have been looking to use the low interest rates to fund their purchases but with Rolex increasing prices, interest rates starting to rise, the UK’s COVID bill to be paid and household bills rising this is not as an attractive route as it was before.

On a personal note I am undecided whether to buy another watch this year, I don’t ‘need’ another watch, would I like another watch - well it’s certainly tempting, my AD is looking for a TT Submariner and a SD43 for me but I am unsure if I will buy either but instead take a year off and watch from the sidelines and see what happens.

Overall, I don’t see any big changes in the market, those that have money will still be looking to buy, maybe a few hovering on the fence will decide to put the purchase on hold but waiting lists will still be there and grey dealers will still be doing good business.

As others have said the next few months will be interesting.

[Harry-57]

Originally Posted by Lewi777

Absolutely agree. But I reckon the UK "waitlists" are going to be full of these people. I'm not saying it will happen now, I'm thinking that in a year or two there may very well be a dent in demand in the UK. Of course Russia many not invade the Ukraine, energy prices might fall, inflation ease and it's all a storm in a teacup. I keep saying UK, because we seem to be in a uniquely bad position (as always!)

I didn't want to come off as snotty and I was a bit reluctant to type it. However, we've all got our POV and I personally believe that things like luxury watches come after all debt is paid off, money is set aside for contingencies, the mortgage is cleared (if applicable), the children are all grown up and self supporting (in as much as they will ever be!), and I'm casting around for something to blow the surplus on (be it £50 or £50k).

If there are waiting lists full of people who won't be able to make it happen over the next two years, others will get their watches faster. I wouldn't wish hardship on anyone, but if a couple of people in front of me fall off my list, I will be ready to realise the benefit and be happy to do so.

Although hype driven demand is fickle and can change direction quickly, there seems to be so much demand at the moment that halving it won't make much of a difference. If a list of 50 becomes a list of 25, the delivery time will halve but could still be years.

We're going to see soon enough. I think the energy price spike is just the beginning. Interest rates have been artificially stifled for years and will start to find their more natural, historic levels. It's going to get worse. I can remember back in the 1980s when my mortgage rate went from 15% to 25% over the course of 18 months or so. I sold my car and we got a lodger in. I remember looking at a Swatch in a window and thinking "that's nice, if only I had £20 to spare). We've had two more UK recessions since then.

We'll get over it. Then there will be another one.

[johnwigan]

26 energy companies have gone bust in the UK since August 2021, due to increases in the wholesale price of energy, and customers on fixed term contracts/legal reasons why they cannot pass on price rises..

Energy cost increases affect businesses and the economy as a whole. Their costs go up which they need to pass onto customers to maintain profits. But customers have less income, not more, because their energy costs have increased. And so on and on...nevermind the tax increases on the way, and all the other bad stuff coming down the line.

[Anton911]

Originally Posted by Lewi777

Tell me about it! It's a fairly large house, but it's the gas AGA that is the main culprit. It's basically like leaving all your gas hobs on 24/7. But there are a load of house in Kent like ours with AGAs. They're stupidly inefficient, but lovely to lean on and the dogs love it! We've been meaning to get rid of it for years but it's a pain as it's connected to our hot water. Anyhow ... I digress. I know we pay more than most for energy for sure.

I have a mains gas Aga however not the same cost as you quoted to run.You will find the expense is due to the hot water aspect.I live in a castle,so I supplement heating with log burning stoves and resort to living primarily in one room in the winter wearing Rolex😊

[Oxfordian]

Originally Posted by johnwigan

26 energy companies have gone bust in the UK since August 2021, due to increases in the wholesale price of energy, and customers on fixed term contracts/legal reasons why they cannot pass on price rises..

Energy cost increases affect businesses and the economy as a whole. Their costs go up which they need to pass onto customers to maintain profits. But customers have less income, not more, because their energy costs have increased. And so on and on...nevermind the tax increases on the way, and all the other bad stuff coming down the line.

Yes, for some the next few months are going to be tough, but I’ll maintain that for many the possible downturn won’t stop them queuing for a new Rolex or other luxury watch.

Sure there may be a down turn in the number of people looking to buy but it won’t be in a sufficient quantity that you would notice at dealers, if the current wait time for a Daytona is 10 years it may come down but will anyone notice?

Don’t forget that there are many folk with money to spend as they are now working from home and not spending money on commuting, any increase in household costs could well be offset by what they are recovering from their daily travel costs.

[Sprezzatura!,]

Originally Posted by Sandpit

You know a lot of people still buy stuff on credit, and that includes watches. Yes in theory people should buy with spare cash, but that simply isn’t the reality. Every man and his dog owns a Rolex now.

I totally agree with this. It’s all down to personal preference and what one values in their lives.

The amount of people who drive cars that are way out of kilter with the houses they own. This is no different with watches, and probably why the landscape of obtaining Rolexes is so difficult - many people have, or intend on buying one.

There’s conventionality, and then there’s reality.

Each to their own.

[Tim Plains]

I don't think it will make any difference. Speaking strictly retail, how much demand is there per watch - 50 people? 250? 1,000? Even if half of the people are in a similar situation as you, supply can't come close to meeting demand, and that's not accounting for new people entering the game.

[Soultime]

Sort of my area I suppose...... Portfolio management.

Current forecasts are for energy prices to increase 50%-60% when the fuel cap is reviewed in April.

Just at the same time as NI increase comes in and Corp Tax starts to climb and Dividend Tax goes up. .

It's certainly going to affect the disposable income for many people in the UK.
I personally see a downturn in the economy by year end.

As for Rolex.....
It is very much a global market now. So it depends what happens elsewhere (will it be like the global financial crisis of 2008 or not?).

And also, will a Rolex be seen as a store of wealth in much the same way gold has been over the years?
Deposit rates are c0.5% with CPI at 5.1%. So bank deposits are guaranteed to lose you a lot.

Crypto certainly isn't a store of wealth as its too volatile. And if it's not currency, its an investment. But of what?
HMRC certainly see it as an investment as gains are liable for CGT.

My guess is Rolex prices may be relatively stable.

[Lewi777]

Originally Posted by Anton911

I have a mains gas Aga however not the same cost as you quoted to run.You will find the expense is due to the hot water aspect.I live in a castle,so I supplement heating with log burning stoves and resort to living primarily in one room in the winter wearing Rolex😊

Haha that made me laugh :)

That bill includes us turning the AGA off in the summer (then the boiler heats the water). I'm always very careful to switch to the best energy deals; we're coming off a great fixed rate now. I really don't know where all our energy goes to be honest, it's a 8 bed detached house and we have two electric cars. But it does seem crazy, I'm certain it's almost all the AGA.

[Lewi777]

Originally Posted by Oxfordian

Don’t forget that there are many folk with money to spend as they are now working from home and not spending money on commuting, any increase in household costs could well be offset by what they are recovering from their daily travel costs.

Absolutley, an annual pass from Kent to London is £5k. Two years working from home and you have your Rolex :)

[Shadow Play]

By way of clarification for any non UK posters here.

The average annual gas and electricity bill in the UK is said to be £1,250. Come April the price cap is expected to raise the average bill to £2,000 ish. Financial Times today leading with a report that come October it will be raised again to £2,400 ish. That is a big chunk out of the average consumer’s disposable income. Money that would probably otherwise be spent in shops, cafes, leisure activity etc.

[brandrea]

Originally Posted by Lewi777

Being on a fixed rate energy tarrif for the last year, the UK energy crisis has largely passed me by, but now I'm coming off that fix I've been offered a renewal. The cheapest new fixed rate for our circa £5k ($7k) energy bill is now £16K ($22K) a year. That's a Rolex a year for the next couple of years at least.

I've been dismissing talk on here of this causing any dent in UK demand, but I do now wonder if this, combined with inflation accross the board might actually be more significant that I'd realised and may very well dampen demand, at least in the short term. I hadn't realised how much energy was going up; a 200+% rise is probably going to cause some here in the UK at least to review that Rolex purchase.

We live in an old, inefficient house with a gas AGA of all things, so we're probably about as bad as it gets in the UK for energy ratings, but I'm thinking of all those big old independent schools that are going to get enormous energy bills, which may very well have to be passed on to those middle-class Rolex buying parents. Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

May I ask, what does your energy bill consist of? Is this for home heating, petrol for your car? Just curious ….

Here in Canada our home energy would be: gas for heating and electric to power the lights and any electric appliances. Our total for last year was:

Gas: $1068
Electric: $ 1968 (this soon to be zero with our solar panel installation and net zero metering.

Car petrol: $780 on my car and $1690 on my wife’s.

[1665fan]

Originally Posted by Shadow Play

By way of clarification for any non UK posters here.

The average annual gas and electricity bill in the UK is said to be £1,250. Come April the price cap is expected to raise the average bill to £2,000 ish. Financial Times today leading with a report that come October it will be raised again to £2,400 ish. That is a big chunk out of the average consumer’s disposable income. Money that would probably otherwise be spent in shops, cafes, leisure activity etc.

U say 2000k a year OP says 22000k a year

[enjoythemusic]

Originally Posted by Lewi777

Pressure is definitely coming to pockets here in the UK and we're told Russia is about to invade the Ukraine - where all the gas flows through to the EU.

Interesting times ...

Some say a sound 'currency' is based on 'energy'. Don't ya just hate the politics of oil? Me too! Would say more, yet I'd get hammer banned. We had built a new energy-efficient home, our combined electric / nat gas bill, which includes occasional pool/hot tub heat, is $200 USD a month.

Have you considered moving out of the UK, that is a wise move imho.


PS: When it comes to USA/UK 'news', don't believe the hype...

[DBlue2018]

Not at all

During periods of high inflation people shift to hard assets so watches will go higher as people don’t want money in currency (the bank)