House prices v divorce rates

Savills Research has proved the theory that falling rates of divorce may relate to falling house prices.

It has analysed the property market's fluctuations and divorce rates in England and Wales to discover that there is a strong link between house prices and the number of divorces.

Over the past decade, a peak in the rates of house prices has been followed by a rise in divorce figures, and the reverse is also true at the time of an economic slowdown.

Director of Savills Research, Lucian Cook, said of the results: “as house prices rise home owners undoubtedly feel wealthier and our supposition is that they also feel able to afford to get divorced.

"We forecast that the current falls in property prices – unwelcome and uncomfortable for the majority – will result in fewer divorces, even allowing for the overriding downward trend in the UK’s divorce rate.”

In the prime property market, around six per cent of house sales are due to divorce, but significantly more couples who have homes in higher price brackets sell their home as a result of divorce. 

Only 5% of sales of prime housing worth less than £500k are due to divorce outside of London. But this rises to an average 13% in the £1-2million price range. 

In the South East of England the average rises to 18 per cent in the £2-4million house price bracket.

“At the lower end of the market it is often easier for one party to buy out the other, whilst at the top end there is more equity at stake,” says Cook.

The data from Savills Research has also suggested that the upward trend in the age at which people divorce has created a significant variation between the number of divorce-related sales in the capital compared to the rest of the country.

Cook says, "with a steady increase in the number of people divorcing in their fifties, it is perhaps more likely that a divorce sale will occur when the couple have moved out of London.

"The proportion of divorce sales of prime property in the South East commuter belt is around 10%, but is at its lowest in London at just 3%."

Divorce and the credit crunch

According to Consilium Financial Planning, the decline in the housing market causes financial problems for those planning to get divorced and divide their assets.

Kevin Morgan, managing director of the financial advisory firm, explains: "Invariably the equity in the relationship is property and if it can't be sold, it's substantially more difficult to release funds."

He said that before the credit crunch began, remortgaging was an option, but the tightening of mortgage funds means this avenue now leads to a "cul-de-sac".

The house is an important asset in any divorce, and couples deciding that they cannot live with each other will have difficulty in reaching a suitable arrangement if they can't sell their property.

Dafydd Hardy, an estate agent based in Gwynedd, said that usually one half of the couple moves out if they can afford it.

But if this isn't a viable option, it will usually leave the couple living together during a divorce.

From an emotional point of view, it's better for one of them to be out of the house. The whole reason for divorcing is that they can't live with each other," he explained.

With the credit crunch biting, more and more people are using the DIY divorce route to save money, as well as to speed up the divorce process.

According to Divorce-Online, online divorces have increased by 52 per cent in the last six months.

Thomas Coles of Lawpack Publishing, which produces the Separation and DIY Divorce Kit, says that DIY divorce "can help you to arrange a divorce cheaply and quickly.

"And even if DIY divorce isn't the right route for you, the DIY Divorce Kit can help you to prepare the right information before you see a solicitor so that you save money on solicitor's fees."

More information
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