The rising cost of housing is significantly impacting women navigating divorce, making it increasingly difficult for them to regain home ownership. Many women, often earning lower incomes due to childcare responsibilities, find themselves without the financial means to secure a mortgage independently. Financial advisor Karen Eley highlights that many women may “go into the rental market and may never purchase a home again.”
In the competitive housing landscape of Newcastle, former homeowner Kes Ball struggles to reintegrate into the market following her separation. “When we separated, we were living in a three-bedroom brick and tile in a nice suburb with a pool in the backyard,” she recalls. After dividing assets and paying off the mortgage, Ms. Ball found herself unable to afford a deposit for a new home, leading to seven years of renting. With her current lease ending soon, she fears her prospects for home ownership are dwindling.
Ms. Ball emphasizes the importance of home ownership for her and her daughter’s financial stability. She advocates for reforms that would allow single parents receiving government benefits to earn more without incurring higher tax rates, which she believes would enable them to save more effectively for a house deposit. “I look ahead and I do the calculations and I realize that I’m probably going to be in my 50s or 60s before I manage to save a sufficient house deposit,” she states.
Women are statistically more likely to face challenges post-divorce. According to a government report, the average 25-year-old woman with at least one child can expect to earn $2 million less over her lifetime than her male counterpart. Eley explains that banks scrutinize credit scores and income to determine mortgage eligibility. “If mortgage repayments exceed 30 percent of a person’s net income, it can lead to financial stress,” she notes.
In light of these challenges, Eley advises women to assess their financial situation prior to separation and maintain a separate bank account to demonstrate saving capacity to lenders. Some separated couples may choose to retain the family home temporarily until their children are older, while others might seek family support for a deposit or assistance with mortgage payments.
The rapid increase in house prices since the COVID-19 pandemic has compounded these issues. Professor Stephen Whelan from the University of Sydney has studied the correlation between housing costs and divorce rates. He notes that while divorce rates have decreased to their lowest since the mid-1970s, housing affordability remains a crucial factor in decisions to separate. In 2023, the divorce rate stood at 2.3 per 1,000 residents, down from 3.4 two decades earlier.
Single parents can apply for the government’s 2 percent home deposit scheme, but eligibility requires being officially divorced. Fiona, who is separated but not yet divorced, expresses frustration at this limitation. “Divorcing would eat into the savings I’m trying to build. I prioritize housing over divorce,” she explains. Fiona believes access to her superannuation could help secure a home, which she views as essential for her children’s future stability.
For women facing financial hurdles post-divorce, Caroline Mundey, a mortgage broker with personal experience in this area, suggests working with financial advisors and mortgage brokers alongside divorce lawyers. “You may be able to negotiate a lower amount of superannuation and a higher amount of cash towards buying you that home,” she advises.
The federal government is considering initiatives such as the Help to Buy Scheme, which would assist eligible buyers by contributing a portion of the purchase price. However, only 40,000 households will qualify for this scheme, leaving many without adequate support.
As housing affordability continues to be a pressing issue, women navigating divorce must face a complex landscape of financial barriers. With increasing advocacy for policy changes, the hope is to create pathways that will enable more women to achieve home ownership in the future.
