His wife swam out to him while his daughter ran to get help from neighbours.
When his wife got to him Mr Watts was not moving and was face-down in the water.
A neighbour helped to drag him to shore and emergency services arrived and began cardiopulmonary resuscitation but he could not be revived.
Police initially thought Mr Watts may have become entangled in kelp, but Coroner Nagara said this could not be established.
The coroner said it was most likely he had inhaled or ingested water unintentionally, which led to a laryngeal spasm.
She noted comments in a police national dive squad investigation report that had he released his dive belt it would have greatly assisted.
The report also said that Mr Watts was diving alone, which meant there was no one immediately available to provide assistance and it recommended that free divers consider diving in pairs.
"I extend my heartfelt sympathy to Mr Watts' family and friends on their sad loss," Coroner Nagara said.