Why Lab-Grown Diamonds Have Lower Resale Value Than Natural Diamonds

Introduction

The rise of lab-grown diamonds (LGDs) has fundamentally changed the jewellery market in London and globally. Offering the exact same chemical, physical, and optical properties as their natural counterparts at a significantly lower initial cost, LGDs are an appealing choice for consumers prioritising affordability and ethical sourcing. However, for those concerned with their assets' long-term financial performance, a crucial distinction must be made: the resale value of lab-grown diamonds is substantially lower than that of natural diamonds. This disparity is not about quality, but about economics. If you are looking to sell a diamond ring in London and understand your asset's true worth, this insight into the dynamics of the LGD secondary market is essential.

Summary

The low resale value of lab-grown diamonds stems directly from their ability to be mass-produced, making them a scalable commodity, unlike the finite supply of natural diamonds. While LGDs offer excellent initial affordability and ethical benefits, their value depreciates quickly due to falling production costs and market oversupply. Natural diamonds, prized for their inherent rarity, retain a significantly higher percentage of their original value. For the most accurate and competitive offer on any diamond piece, always consult with specialist Hatton Garden dealers.

The Core Driver: Scarcity vs. Scalability

The fundamental reason for the difference in resale value is rooted in supply economics, which is highly valued by diamond buyers in Hatton Garden:

1. Natural Diamonds: True Rarity: Natural diamonds were formed billions of years ago under immense pressure deep within the Earth, representing a finite, non-renewable resource. This geological scarcity creates inherent, sustained value in the secondary market. Buyers are willing to pay a premium because the supply is fixed and controlled.
• Natural diamonds typically retain 40% to 60% of their original retail value on resale.
2. Lab-Grown Diamonds: Scalable Manufacturing: LGDs are manufactured in labs using the HPHT (High-Pressure, High-Temperature) or CVD (Chemical Vapour Deposition) methods. While chemically identical, their supply is limitless and scalable. As production technology improves, the cost to create a diamond drops rapidly and continuously.
• LGDs often resell for as low as 10% to 30% of their original purchase price, reflecting their manufacturing cost, not their rarity.

Factors Driving Down LGD Resale Value

Three key factors ensure that the resale value of lab-grown diamonds continues to depreciate:

• Technological Advancements & Price Correction: Just like computers or flat-screen TVs, the production cost for LGDs falls yearly. An LGD purchased today will compete with stones produced next year at an even lower cost, driving down the value of the older, pre-owned stone.
• Oversupply and Market Maturity: The LGD market is still nascent and rapidly expanding, leading to oversupply. Unlike natural diamonds, which have a regulated distribution channel, LGD supply can be flooded, which exerts continuous downward pressure on prices, particularly in the secondary market.
• Limited Secondary Market: The network of specialist diamond buyers, auction houses, and retailers who actively purchase pre-owned LGDs is small and underdeveloped compared to the established global infrastructure for natural diamonds. This lack of liquidity makes it harder to sell lab-grown diamonds in London at a competitive price.

What This Means for Sellers in London

If you own a diamond and are considering selling, transparency is key. Reputable dealers in Hatton Garden will conduct a full, expert diamond appraisal that accurately assesses both the natural and lab-grown markets:

• For Natural Diamonds: Focus on securing the best price for your stone and its metal setting. Request an appraisal today to understand its true, stable value.
• For Lab-Grown Diamonds: Recognise that the value lies primarily in the metal setting (gold or platinum). The LGD should be viewed as an affordable, beautiful piece of jewellery, not a financial asset. A professional buyer will still offer you a value, but expectations must be managed based on current market depreciation.

Conclusion

Whether you own a natural diamond or a lab-grown stone, understanding the economic realities of the diamond resale value is the first step toward a successful transaction. If you prioritise long-term value retention, natural diamonds remain the superior choice. If you prioritise initial affordability and ethics, LGDs are perfect. Regardless of your stone's origin, Visit Our Store Today for an expert, transparent free valuation in London's jewellery quarter.

Ready for a clear, expert valuation of your diamond jewellery?

Get a free quote today from our Hatton Garden specialists. Request an appraisal for your natural or lab-grown diamond to understand its true market value!

FAQs

Q: Can I still sell my lab-grown diamond?

A: Yes, you can still sell lab-grown diamonds in London, but you must expect the resale price to be a small fraction of the original retail cost due to rapid depreciation. The gold or platinum setting will likely account for a significant portion of the cash offer.

Q: Why do some jewellers refuse to buy back lab-grown diamonds?

A: Many traditional jewellers focus on natural diamonds and do not have established channels or demand for pre-owned LGDs, which limits their liquidity. This is a key factor in the low secondary market value for LGDs.

Q: Does certification (GIA/IGI) help the resale value of a lab-grown diamond?

A: Yes, certification, particularly from IGI, is essential for proving the diamond's 4 Cs (Cut, Colour, Clarity, Carat) and confirming its identity, which makes the item easier to sell and helps secure the best possible offer on the secondary market.

Q: Do natural diamonds appreciate in value?

A: While they generally hold their value much better than LGDs, natural diamonds are not guaranteed investments. Only very rare, large, and high-quality natural diamonds have a historical tendency to appreciate significantly over long periods.

Q: Where is the best place in London to get an honest valuation for my diamond?

A: Hatton Garden is the historical centre of the London diamond trade. Specialists here use real-time market data for natural diamonds and understand the depreciation curves of lab-grown diamonds, ensuring you get a fully transparent and accurate free valuation.