Pop the question now as diamonds are getting cheaper. Here's why

If popping the question with a sparkling diamond felt like a distant dream, now might be the perfect time to reconsider.

According to a report in the Guardian, over the past two years, the price of natural diamonds has fallen by 26 per cent. Their identical twin, lab-grown diamonds, meanwhile, have seen an even steeper decline, with prices plummeting by 74 per cent since 2020.

So, whether you’re planning to go down on one knee or looking for a sparkling keepsake, diamonds are not quite so far out of reach these days. But what’s causing this dramatic price crash? Could prices dip even further? And what does this mean for the diamond industry as a whole? Here’s a closer look.

Diamonds losing the sparkle

Diamonds may be forever, but the price is dropping fast. As per Tenoris, which tracks diamond sale prices in the US, the prices for precious stones peaked in 2022 however, since then, the average price of a one-carat natural diamond has fallen by more than $1,800 (Rs 1.55 lakh), reaching a low of $3,923.83 (Rs. 3.39 lakh) last month.

Whereas lab-grown diamonds of the same size have seen average prices drop from $3,410 (Rs 2.95 lakh) for a one-carat cut to $892 (Rs 77,212).

The news comes as De Beers, the South African mining giant which until recently dominated the global diamond trade, is reportedly sitting on $2 billion worth of unsold inventory, reported The Financial Times in December. This marks the company’s largest stockpile since the 2008 financial crisis.

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De Beers’ interim financial results for 2024 reveal a sharp decline in sales volumes, dropping 22 per cent in the first half of the year to 11.9 million carats, compared to 15.3 million carats during the same period last year.

In response, the company has reduced production in its mines by 20 per cent. Meanwhile, its parent company, Anglo American, has reportedly put De Beers up for sale.

“It’s a bad time to buy a diamond,” a jeweller this weekend in Hatton Garden, the centre of the London diamond trade told The Guardian. “They’ll probably be cheaper in a few weeks.”

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But why?

Several factors have contributed to the dramatic fall in diamond prices, according to Edahn Golan, managing partner of Tenoris.

“After Covid, there was a burst in demand for diamonds,” he said referring to the “revenge spending” that led to the post-pandemic boom in luxuries and rescheduled weddings. Once this initial surge in demand was met, however, interest sharply declined.

Lower demand from China (down nearly 50 per cent, according to industry analyst Paul Zimnisky), economic uncertainties, and fewer marriages have all played a role in the price drop. But the biggest shift comes from the rise of lab-grown diamonds.

These diamonds, which once took weeks to grow, can now be created in a matter of hours in plasma reactors, a far cry from the billions of years it takes for natural stones to form.

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Their provenance is also much easier to trace than mined diamonds, which means lab-grown are seen as more ethical by millennial and GenZ buyers. As a result, synthetic diamonds now make up 45 per cent of the bridal jewellery market, posing a significant challenge to the likes of De Beers.

Robert Willis, director at E Katz & Co in London’s Hatton Garden, notes that while customers are still spending big, with budgets of £5,000 (Rs 5.38 lakh) to £8,000  (Rs 8.61 lakh) for rings, nearly double what they spent 10 years ago – their focus has shifted.

“They are much bigger stones,” Willis says of lab-grown diamonds. “About two or three times bigger… three carats is normal, even four or five.”

However, Geoffrey Farrow of Raphael jewellers holds a different opinion. “They are synthetic,” he says, dismissing the appeal of lab-grown diamonds. “Lab-grown sounds exotic, but it’s created – they make it by the buckets. There’s no history to it. The price is going to go down further and further."

“It makes the stone that much cheaper, and people have the illusion that being big is something special,” he adds. “It’s not. It’s quality that you want.”

Also read: Why diamonds are losing currency, a hint from labs

What’s next?

Despite the current slump, some experts believe the diamond market could see a slow recovery.

A Newsweek report citing management consulting firm McKinsey described the industry as being at an “inflection point,” having faced unprecedented disruptions during the COVID-19 pandemic.

To stabilise prices, McKinsey analysts emphasise the need for major industry players to focus on promoting the unique allure of natural diamonds, which have struggled to compete with synthetic alternatives.

Additionally, the industry must address growing concerns over the environmental and ethical implications of diamond mining.

“Moving forward, traditional diamond industry players will need to adapt by diversifying their product offerings or communicating the unique value propositions of natural stones,” the report highlighted.

With input from agencies