Loss of partner doubles housing cost burden

The Age (Australia) July 17, 2007
PEOPLE who divorce, separate or lose a partner through death are more likely to surrender their homes, with the housing cost burden doubling for this group. Research by RMIT University, based on analysis of more than 3000 couples from the Household, Income and Labour Dynamics in Australia surveys between 2001 and 2003, found a dramatic increase in the cost burden for those who lose a partner. The proportion of income spent on housing costs jumped from 10.5 per cent of gross income to 22 per cent of gross income over 12 months. It also found that the loss of a partner was more likely to result in the loss of a home.One year after a loss of a partner, the home ownership rate fell from 69 per cent to 53 per cent, and the rental rate increased from 31 per cent to 47 per cent. In contrast, for those couples who stayed together, the home ownership rate improved from 85 per cent to 86.5 per cent. The research also showed the problem was worse for women, as they were less likely to find another partner than men, and more likely to live longer. Professor Gavin Wood, one of the researchers involved in the study, said about a quarter of couples who were once home owners lost their homes when they divorced, separated or were bereaved of a partner. Of the sample, 60 per cent lost their partners through divorce or separation, while the other 40 per cent lost them through death.Being reduced to one income to service mortgage costs was more difficult, leaving many unable to sustain the housing cost burden, Professor Wood said. “Divorce and separation now poses a much bigger threat to home ownership aspirations than it did 20 to 30 years ago,” he said.