Rising property prices mean couples can’t afford to split up and go their separate ways – so divorce rates are dropping.
Warring spouses are deliberately delaying their divorce settlements in order to cash in on soaring house prices. The surging property market, which rose by 10 per cent nationwide in the past 12 months, is causing valuations to go out of date before the ink is dry on divorce papers.
Divorce lawyers say some ex-partners are demanding multiple valuations in a bid to maximise their payout so they can afford to get into a new home. Even once the payouts are made, ex-partners are feeling the pinch of larger mortgages in the heated property market. Figures from Statistics NZ show the divorce rate dropped to its lowest rate on record last year, with about 10 divorces per 1,000 marriages. Meanwhile, house prices in Auckland rose by nearly 20 percent in 12 months.
Leading divorce lawyer Lady Deborah Chambers QC said she knew of cases going through the courts where couples were disputing the family home value, leading to a delay in settlement. In one case a judge ordered the house to go up for auction to finalise a property value rather than relying on valuations. One Auckland divorcee, who who asked not to be identified, said he was waiting for the third valuation in nine months as he attempts to buy his ex-wife’s share of the family home.
Their East Auckland house jumped $75,000 in value in four months between the past two valuations requested by his former wife. “There could be another jump of $10,000 or $100,000. I don’t know where that number will fall.” The Auckland man said he expected the divorce settlement to take a few months but changing expectations over house prices dragged the process out.
He wanted to keep the $1.2 million home for the stability of his children who attend school nearby. He has already spent $20,000 on lawyer fees and thousands on valuations as the battle continues. “The longer the process is drawn out, the more you lose in lawyers fees, the more stress is involved and there is more distance between you and your former spouse.”
Otago University law professor Mark Henaghan said once a divorce case goes to court the judge will decide the valuation date, which is usually the day of the hearing. Once a settlement was reached, the warring parties could no longer dispute the property value, even if the house value continued to climb skyward. Divorce lawyer Jeremy Sutton said separating couples were placing more emphasis on property than children as property prices sky-rocketed.
One of the parties often feared finalising a divorce agreement without allowing for future price rises, he said. Even once an agreement was reached, he said, those who retained the house sometimes need to get flatmates in to pay the mortgage. The other partner might struggle to afford a new home. “There are people feeling the squeeze.”
Source: [email protected] – Sunday Star Times