Is now the time to invest in luxury assets? Cost of used Rolexes have fallen to two-year lows while polished diamonds have dropped 20% - but experts urge caution against scooping up goods while they're cheap

The pandemic-era luxury boom appears to be coming to an end - with the price of high-end investments like Rolex watches and diamonds falling. 

During the years of Covid-19 lockdowns, demand surged for designer handbags, precious jewelry, fine wines and pre-owned timepieces as stuck-at-home shoppers found themselves with excess capital to splurge on luxury goods. 

But as interest rates hover at 22-year highs amid lingering inflation, and households are increasingly feeling the pinch, the luxury surge seems to be slowing - and bringing down the value of items with it.  

The price of used Rolex and Patek Philippe watches fell to fresh two-year lows last month amid rising supply and waning demand. 

Prices for wholesale polished diamonds have tumbled by around 20 percent this year, according to Bloomberg.

Amid the global slowdown, is now the time to scoop up luxury assets while they're cheap? 

Andrew Shirley, head of rural and luxury research at Knight Frank, warns potential investors to do their research - and be aware of the difference between passing trends and collectors' items before investing.  

Shirley edits the company's annual Luxury Investment Index, which tracks the value of the ten most popular collectibles including cars, jewelry, watches, art and whisky. 

'There are opportunities, but be careful,' he told DailyMail.com. 

'It is important to seek out genuine prominence and rarity. Keep track of these markets, research them and talk to dealers that you feel you can trust, and you can perhaps start to identify areas that might be a little bit undervalued or have the potential for growth. 

'But if Hermès handbags are worth a bit less now, don't just start buying any old Hermès handbag because you think they're cheaper than they were before.     

'Don't pile into a market just because it's going down. It might carry on going down because there was no reason for it to be high in the first place.'

Experts caution that pre-owned Rolex and Patek Philippe watches, for example, could continue plunging in price. 

The Bloomberg Subdial Watch Index, which tracks prices of the 50 most traded watches on the secondary market, dropped 1.8 percent in October to around $34,000.

It is at its lowest level since 2021, and down 42 percent since a near $60,000 peak in April 2022.

Christy Davis, co-founder of UK-based trading platform Subdial, said in the company's October update: 'We are seeing growing downward pressure in the market, which could lead to a further downward drift in prices as dealers cut valuations to chase sales.' 

Joe Osborn, finance and business editor at non-profit Dealaid.org, told DailyMail.com: 'Despite a huge drop, right now is still not the best time to invest in used luxury watches if you are strictly looking at reselling them. 

'What you want to see in the market is a flattening of price for about 6 to 12 months, that would be a more precise indication of market pricing bottoming and giving you little downside risk. 

'But if you're planning to get a used luxury watch and wear it yourself or gift it to someone, right now is a great time to buy.'

Shirley warns that there is a 'false market' for some luxury watch brands, as companies were limiting supply to create an 'artificial sense of demand.'

The limited-edition watches which are harder to get hold of will stand as investments in the long-term, he said, and the same can be said of many rare collectors' items. 

'Core markets will be fine as there is still an awful lot of money in the pockets of collectors,' he said. 

'What may be going down is perhaps the periphery bits of those markets where there are collectors who might drift in and out when they thought there was money to be made.'

When it comes to diamonds, Shirley noted that white diamonds are not particularly rare. 

'White diamond prices are driven by the jewelry trade and a fall is likely due to consumers cutting back on their spending at the moment.'

Color diamonds are where the rarity and value lies, he added.

The trick now for collectors is to identify markets that are undervalued, Shirley said. 

According to the Knight Frank Luxury Investment Index released in August, art pieces are still seeing healthy returns - with creations by women experiencing the biggest surge in value over the last decade.

Pieces specifically by women have seen their value shoot up by 163 percent in the last ten years.

Female artists saw the bulk of this growth between 2016 and 2019 - a period which coincided with powerful social change movements such as '#Metoo,' the report said.

'Values are heading back to where they always should have been as they were intrinsically undervalued,' said Shirley.

For Shirley, the key is to remember these should be 'investments of passion', and those looking for quick appreciation may be better off investing in more liquid assets. 

'In my opinion you should be buying these things because they are assets you want to own,' he said.