Page 5 - FWP Wealth Adviser newsletter - Issue 117: August 2025

ISSUE 117
AUGUST 2025

the costs (both direct and hidden) of ending a marriage rise disproportionately after separation, especially if they
proportionally. have given up paid work or have limited superannuation.”
“Recent research shows high house prices are associated (University of Sydney News, 15 July 2025)
with couples delaying separation—even when relationships Even for those with means, the process of acquiring
have run their course. Decisions about marriage dissolution suitable, stable housing—let alone retaining proximity to
are increasingly influenced by the daunting prospect of children’s schools or professional networks—can create
selling the family home and the uncertainty of re-entering significant obstacles. As Ticker News noted: “The economic
the property market.” (University of Sydney News, 15 July realities of setting up two households in today’s property
2025) market mean that, for many, the financial and emotional
These financial stakes have led to a phenomenon some cost of starting over is now higher than ever.” (Ticker News,
have dubbed “relationship lock-in,” where couples, espe- 14 July 2025)
cially those with children or shared debts, feel compelled to The impact of these costs runs deep, influencing not
remain together. just the timing of divorce but also individual well-being,
“In many cases, families may find it difficult to afford two financial independence, and the intergenerational transfer
homes in the same school zone, or close to existing work of wealth.
arrangements. The alternative often means a dramatic drop
in living standards for one or both parties.” (Firstlinks/ Laws and Loopholes: No-Fault Divorce as
Firstlinks republished by The Conversation, July 2025) Context, Not Cause
As property has become less affordable, divorce—which While the accelerating property market has reshaped
used to be more common among lower-income Australians— divorce dynamics, the legal structure governing separation
now occurs more frequently among those with greater in Australia also plays an important, if supporting, role.
economic security. “Divorce, once more common among Australia introduced no-fault divorce with the Family
lower-income Australians, has become more prevalent Law Act 1975, making it possible for one spouse to end a
among those with greater economic security…” (The marriage without assigning blame. This shift removed many
Conversation, 13 July 2025) barriers to separation and ushered in an era of rising divorce
Financial considerations aren’t limited to mortgage re- rates—at least initially.
payments or selling costs; they also encompass transactional “Legal ability to separate does not guarantee practical abili-
fees, real estate commissions, moving costs, legal fees, and ty—especially when real estate is involved and the financial
the emotional toll of upheaval. The longer couples remain implications are so significant.” (Firstlinks/University of
in these strained circumstances, the greater the impact on Sydney)
personal wellbeing and family harmony. Over time, the focus moved from the grounds for divorce
to the realities of asset division, child custody, and housing
The Cost of ‘Moving On’: Housing Affordability, affordability. While no-fault divorce laws have enabled
Renting, and Single Life greater autonomy for individuals, current property values
Separation is not simply a matter of dividing assets and have, paradoxically, restored some of the very pressures
going one’s own way—it involves navigating some of the that once kept couples together for economic rather than
most competitive housing and rental markets in the devel- emotional reasons.
oped world. For many, this process is daunting and at times Some research cited by The Conversation points out that
prohibitively expensive. the intent of the law was to make divorce accessible and fair,
“Families may find it difficult to afford two homes in the but “in a climate where house prices soar, financial con-
same school zone, or remain close to work arrangements, straints can eclipse both the intent and the letter of family
resulting in one or both parties accepting significant lifestyle law reform” (The Conversation, July 2025).
and financial sacrifices.” (Firstlinks) What has changed is not so much the legal path to
In high-demand suburbs, rents have soared alongside divorce, but the threshold for pursuing it. Choices about
sale prices. For women, single parents, and older adults— when and how to separate are now far more influenced by
demographics highlighted in both The Conversation and economic realities than by legal strictures alone.
University of Sydney News articles—the challenges are
especially acute. Women, in particular, face a higher risk of Policy Responses and Looking Forward:
housing stress and lower rates of home ownership post-di- Rethinking Financial Wellbeing in Relationships
vorce, while single parents often struggle to find affordable, The convergence of high property prices and complicated
suitable accommodation. marital transitions has caught the eye of policymakers,
“Australian women continue to experience housing stress financial planners, and social commentators. With clear

5