One couple bought a house on Auckland's North Shore for $2.4 million in early 2022, and have since seen the value drop to $1.7 million.
By Susan Edmonds of RNZ
Now they have split up, the remaining equity is not enough to set up two independent households of the same standard as the one they had together.
Another bought in Hamilton for $850,000 and now find the home is worth $670,000. Although they are separating, they are in negative equity and feel they cannot sell, even if they wanted to.
Still another ran a construction company that went into liquidation six months ago.
The morning headlines including rising Ebola cases in DR Congo, scorching temperature across Europe and the loudest man in the world is crowned. (Source: Breakfast)
They had already decided to separate, but now have one income, significant debt, and a house that has dropped in value too much to move.
The couples are three examples divorce coach Bridgette Jackson, of Equal Exes, says she has worked with in recent times as separating couples around the country grapple with the realities of the housing market.
She said about 60% were living together after separation, at least for a while, while they worked out what to do.
Since the peak of the market in 2021, house prices are down about 17% nation-wide, and more in Wellington and Auckland.
While this has been good news for buyers, and first-home buyers' share of transactions has increased, it is tough for those who bought at the peak - particularly if they now need to sell.
On first-home buyer groups, there have been a number of posts in recent months from people whose circumstances have changed unexpectedly. "In 2021 me and my husband bought our house with a 20% deposit, for a price of $460,000," one wrote. "I don't want to sell the house… can he sell it without my consent?"
Another asked how long it was worth holding in the hope a big drop in value would turn around and allow them to move on.
Jackson said it was a problem around the world but in New Zealand, the speed and severity of the property market's fall meant families were feeling it acutely. She said the couples she cited as examples were often high earners and not reckless people.
"The market has simply moved underneath them."
She said people often stayed living together because there were no alternatives that worked.
"One of the biggest points of conflict I am dealing with repeatedly is the disagreement over whether to sell. One partner wants out. They are willing to take the loss, walk away with whatever equity remains, and start fresh. The other refuses to sell in a 'down market'.
"What I am seeing is that people try to hold it together, to be civil, trying to make it work for the children. And then one day they cannot deal with it anymore and they leave. They walk out with nothing sorted, no agreement in place, no plan, because the emotional toll of staying has become unbearable. That is when things get messy and expensive. That is when lawyers get involved in the worst possible way."
Cotality chief property economist Kelvin Davidson said the "days to sell" measure was higher than normal. This represents how long it would take to clear the available inventory of housing at the current rate of sales.
"I wouldn't be surprised if it's even a bit higher in that owner-occupier or mid-to-upper end segment because we know that movers are generally less active than normal. People staying put in their own houses more often will be reducing the potential buyer pool for others who want to sell such as those separating."
Jackson said people who wanted to be able to live together while separated needed written boundaries and rules.
Those who decided to go it alone would also need a strategy.
"More women are leaving relationships because they are done carrying the load. But many have sacrificed career progression and are now trying to re-enter the housing market as a single income earner in the worst property environment in decades. And I am seeing more older couples separating.
"People in their 50s, 60s, and 70s who are deciding they do not want to spend their remaining years unhappy. The challenge is they have less financial runway to recover, particularly when their home has lost a third of its value."
She said people who did well through separation were being deliberate about it and getting the right support early.
"The housing market is not going to fix this for anyone and you cannot control it. But how you respond is within your control. "
Paul Sumich, a real estate salesperson at Harcourts, said in about 70% of the separations he was involved in people wanted to buy each other out but could not. "There is frustration around that as both have to start again."
He said it would be hard for people to stay together after deciding to split. "Although it's tricky with the relationship ending and kids possibly in the mix. The first step is seeing if one can buy the other out then if not get it on the market and just move on with life. The potential money lost hits both people but dragging it out is worse."
SHARE ME