Property Settlements During Divorce:
Navigating the Complexities for a Fair and Equitable Outcome in the Uncertain Housing Market.
Divorce can be a difficult and emotional process, and property division can add an extra layer of complexity. In Australia, the Family Law Act 1975, oversees the property settlement process, promoting a fair and equitable outcome for all parties involved. However, navigating this process can be particularly challenging during uncertain times, such as the current unpredictable state of the housing market.
Background: Australian Housing Market
By now, many of us are aware of the volatility and uncertainty plaguing the Australian housing market and the economy. To provide context:
- According to CoreLogic, Australian home values rose 25.4% between March 2020 and March 2022. However, they experienced a sharp decline of -9.1% in April 2023 relative to April 2022.
- The cash rate has increased by 3.60% from May 2020 till May 2023, impacting the increase in interest rates. RBA
- Inflation has increased to 7% as of March 2023. RBA
This volatile economic landscape introduces additional variables into property settlements during divorces, leading to potential confusion and heightened uncertainty.
The Importance of Considering Factors of the Australian Housing Market and Economy
Recognising how the current housing market influences your property settlement is crucial. Let’s illustrate with a hypothetical situation:
Suppose you and your ex-partner purchased a house in Sydney for $1 million in 2020. By 2022, according to CoreLogic data, the house value had risen by approximately 25.4% to $1.254 million. However, in April 2023, there was a sharp 9.1% decline, bringing the value down to approximately $1.14 million.
This drastic change in property value significantly affects the division of assets. If you were to split the property in 2022, each party might walk away with around $627,000 (excluding fees and charges). But if the property were split post the 2023 decline, it would be approximately $570,000 each – a notable difference of $57,000 per person.
Furthermore, if one party is keen on retaining the property, they must consider future fluctuations in the property’s value, potential hikes in mortgage repayments due to rising cash rates, and the increase in utility expenses owing to inflation. All these factors could drastically affect the affordability of maintaining the house independently.
Seeking Guidance and Recommendations
To ensure a fair and equitable outcome, it’s advisable to consult a seasoned family law practitioner. They can help you understand the potential implications of the housing market on your property settlement and how to best navigate them.
For example, your lawyer might recommend seeking an updated property valuation closer to the settlement date, to ensure a more accurate reflection of the property’s current value. They could also advise negotiating terms to account for potential market volatility, such as delaying the sale of a jointly owned house until market conditions improve.
Consider also involving a financial advisor or property expert. They can provide valuable insights into the likely direction of housing market trends and offer advice on managing property-related expenses in the face of rising inflation and cash rates.
Navigating Divorce and Property Settlements
Navigating a property settlement during uncertain times in the housing market can be challenging, but with the right guidance and support, it is possible to achieve a fair and equitable outcome. By seeking the advice of a qualified family law practitioner like Edwards Moloney Family Law and taking steps to protect yourself, you can feel confident that your interests are being protected during this difficult time. We invite you to reach out to us, ensuring that your interests are safeguarded during these demanding times.
Divorce & Separation
Expert divorce lawyers
When married couples separate, there is only one ground for the grant of a Divorce Order, and that is the irretrievable breakdown of the marriage. This is established by the parties being separated for a minimum of 12 months. In some circumstances, parties can be living under the same roof and still be able to establish this ground.
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Edwards Family Lawyers can assist you and your spouse/partner to come to an agreement in relation to all financial matters and issues arising from the breakdown of a relationship, including the division of all assets and liabilities, spouse maintenance payments, superannuation splitting orders and child support departure Orders.
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Opportunities for negotiation and settlement exist not only before proceedings are commenced, but also after proceedings have been commenced and right up until the time that the Court finally hears and determines the matter. Parties can settle a matter at any time.
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The best interests of the children is the paramount consideration when determining the most appropriate and suitable arrangements for the children after a separation. At Edwards Family Lawyers, we encourage our clients to participate in the counselling or mediation services available to assist them to reach an agreement with their spouse/former partner
Edwards Family Lawyers offer Mediation Services to assist parties to engage in effective dispute resolution. Our Principal, Frances Edwards, has extensive experience in negotiating settlements in both parenting and property matters, and is a National Accredited Mediator and member of LEADR and IAMA.
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De Facto couples (including same sex couples) who separate after 1 March 2009 have the same rights as married couples. The rights and obligations of couples upon the breakdown of a Marriage or De Facto relationship are now all governed by the Family Law Act 1975. De Facto couples who separated prior to 1 March 2009 are still covered by the old State legislation
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