The divorce rate has been growing steadily over the past few years, but there is growing speculation that the current credit crunch, and the affect it is having on the housing market, will impact on this trend.
The speculation is based on the following theory: when the property market is sluggish, couples are less likely to divorce because they may be forced to live under the same roof whilst they try and find a buyer for the former matrimonial home. Instead, they try to bury their differences and soldier on until the market recovers and it will be easier to move on and start afresh.
If this theory is to be believed, it will equally apply to unmarried couples that “cohabit” where each has an interest in the family home, as well as cohabiting gay and lesbian couples, or those in civil partnerships.
Family and Divorce Solicitor at Frettens, Hannah Dominey, considers whether there is any basis for this theory, commenting “Research indicates that since 1997 there has been a strong correlation between the number of divorces and the growth in house prices. Although housing booms in previous decades don’t show the same correlation, this may be due to the fact that those periods also correspond to a more conservative social climate when divorce was less of an option.”
The same research also suggests that downturns in the economy and the housing market can cause a surge in the divorce rate after the bad times are over; money difficulties during the economic downturn place a strain on relationships and couples that buried their differences when times were hard, suddenly make a bolt for freedom when the economy improves. If this is true, then any decline in the divorce rate that we see as a result of the credit crunch will be temporary and will be matched by a sharp increase once the storm has passed.
There is also anecdotal evidence that where, due to financial circumstances, couples have been forced to live together during difficult times in their relationship, they are sometimes able to work through their problems and ultimately stay together.
For the super rich, the theory seems to be operating in reverse: the divorce rate amongst very wealthy couples is increasing during the credit crunch because the decline in their lifestyle is causing them to confront serious problems in their relationship. Put simply, they no longer have the money to cover over the cracks. This view seems to be borne out by conversations with divorce lawyers in New York who have reported an increase in enquiries from Wall Street millionaires and their spouses.
Hannah concludes, saying “The basic lesson is that relationships, especially marriages, are governed just as much by economics as love and romance. But did anyone ever think they weren’t?”