New research highlights the financial barriers to separation as property values climb
Rising house prices in Australia are contributing to a decline in divorce rates, with new research suggesting that financial barriers are keeping some couples together.
Research presented at the Australian Conference of Economists examined whether unexpected changes in housing price growth influence the likelihood of divorce. Using data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, the study found that unanticipated shifts in house prices – referred to as “shocks” – can prompt couples to reconsider their marital status.
“Our research sought to understand the key factors associated with divorce in Australia,” said Stephen Whelan, associate professor of economics at the University of Sydney. “Not unexpectedly we found couples who share similar traits such as the same religion, education level or place of birth are more likely to remain married. A longer time being married is also linked to couples being less likely to separate. In contrast, partners whose parents had divorced are more likely to separate.”
Economists explain that people generally marry if the expected benefits outweigh those of remaining single, but changing circumstances can prompt a reassessment of whether to stay married or separate, taking all costs into account.
The analysis, published in The Conversation by Whelan and fellow economics lecturer Luke Hartigan, revealed that for homeowners, lower-than-expected growth in property values increases the likelihood of separation, as the reduced financial penalty of running two households makes divorce more feasible. Conversely, higher-than-expected house price growth may discourage separation, particularly among women with lower education levels, low-income households, and older couples.
National property values have increased by about 38% over the past five years, according to recent data, and this trend is influencing not only affordability but also household decisions such as marriage and separation.
While higher housing costs are a major factor in the country’s cost-of-living crisis, their impact extends beyond affordability, affecting health, housing security, and the ability of some families to meet basic needs. The connection between property prices and marital stability, however, has received less attention.
Australia’s divorce rate is now at its lowest level since the introduction of no-fault divorce in 1976. Unlike the 1990s recession, which saw a rise in divorces during economic hardship, current financial pressures appear to be discouraging separation. Researchers note that some couples may wish to divorce but are deterred by the financial consequences.
“Divorce is a decision that brings with it significant costs,” Whelan said. “The financial implications of divorce could mean couples stay together longer than they’d like to. Our findings indicate higher-than-expected house price growth may be keeping some people in marriages they’d otherwise leave, but don’t, for financial concerns.”
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