Booming property prices add to difficulties for separating couples
Residential property prices have risen sharply in the past 12 months - up 13.1 per cent in Sydney, and 4.7 per cent in Melbourne and, as a consequence, made relationship breakdowns even more difficult.
The rise in property prices, including increased rent, often means that parties are unable to secure alternate accommodation and vacate the matrimonial home. As a result many separating couples are being forced to remain living ‘separated under the one roof’, leading to increased tensions between parties at an already stressful time. These ongoing tensions can make it difficult for parties to achieve an amicable agreement and it’s not uncommon for parties to then incur otherwise avoidable legal fees and court costs.
The price boom is advantageous for parties who are able to agree to sell the property, however it has given warring parties more to argue about.
Often one party may seek to keep the property, usually if there are young children or children completing their HSC, however for current property prices mean that they can’t afford to “buy out” the other party’s share of the property.
In a recent article Simon Doak, senior sales agent at McGrath in Edgecliff in Sydney’s eastern suburbs, stated that clients in the process of splitting up are regularly surprised by how much their family home has grown in value and went on further to state that parties “often tried to buy each other out but the growth, particularly this year, means there’s too much of a gap.”
Even if the parties agree that one party can “buy out” the other, there’s often dispute about the property’s value. Unless an agreement can be achieved an expert valuation needs to be obtained.
The steadily increasing property prices have also seen some parties deliberately delaying proceedings to capitalise on the growth of the value of the property. When determining a matter, the Court is required to take the value of the respective assets and liabilities into consideration as at the date of a hearing. In circumstances where current delays in the system mean that it can take anywhere between 12 months to three years for a matter to be heard, this can mean a significant difference in value.
Some would also attribute the decline in the number of Divorce Applications and Property Settlement Applications filed with the Court to parties delaying separation to capitalise on the increasing values.
With property prices not appearing to cool down anytime soon, many more couples may be faced with increasing complications negotiating not only the breakdown of their relationship but also the property market.
For more information on property settlement in a divorce please read our Plain English Guide to Protecting Your Interest in a Property and Plain English Guide to Property Settlement under the Family Law Act.