What happens if property value changes before divorce settlement in Australia?

In Australian family law, governed primarily by the Family Law Act 1975 (Cth), the division of property after separation is designed to achieve a just and equitable outcome for both parties.

Because of this overarching principle, the value of assets is almost always assessed at the time of settlement or final hearing, not at the date of separation.

This approach helps ensure that the property pool reflects the most accurate and current picture of the parties' financial circumstances.

However, this also means that any increase or decrease in property value before the divorce settlement can materially affect the outcome.

Fluctuating property values, whether due to market trends, renovations, business performance, interest rate changes, or global financial conditions, can significantly change what each party ultimately receives.

For many separating couples, this creates uncertainty and anxiety, especially when the home is the major shared asset or when business assets are volatile.

Having timely legal advice is essential. We have helped hundreds of clients navigate these valuation challenges and protect their interests throughout the property settlement process.

This comprehensive guide explains, how valuation timing works in Australian family law, why it matters, what happens when values change unexpectedly, and how separating spouses can strategically manage these fluctuations.

Whether you own a home, several investment properties, a business, or a mix of assets, understanding these rules can help you approach settlement with clarity and confidence.

Understanding Property Settlements

Property settlements in Australia follow a structured approach that ensures fairness, transparency, and consistency.

Under section 79 of the Family Law Act 1975 (Cth) and corresponding provisions for de facto partners, the Federal Circuit and Family Court of Australia (FCFCOA) undertakes a four-step process when determining property division :

1. Identify and value the asset pool

Assets and liabilities of both parties are combined into one pool, regardless of whose name they are in.

This may include :

• The family home
• Investment properties
• Businesses or shares in companies
• Vehicles, machinery, or other fixed assets
• Superannuation
• Savings, shares, cryptocurrency, or managed funds
• Liabilities such as mortgages, loans, and credit card debts

Accurate valuation is essential because inflated or outdated figures can distort the entire settlement. Professional valuations help prevent disputes and ensure the court has reliable information.

2. Assess contributions

The court evaluates the contributions each party made during the relationship.

These include :

• Financial contributions (income, savings, investments, inheritances)
• Non-financial contributions (renovations, business involvement, managing properties)
• Homemaker and parenting contributions (raising children, running the household)

These contributions influence the percentage split of the property pool. For example, longer relationships often see contributions assessed more equally.

3. Consider future needs

The court adjusts percentages for factors such as :

• Age and health
• Earning capacity
• Primary care of children
• Financial resources and support obligations

It aims to ensure that both parties can move forward with adequate financial security.

4. Decide whether the final outcome is just and equitable

This final step ensures fairness in the overall division.

The court may adjust the settlement if special circumstances apply, such as economic misconduct, wastage, or prematurely spent assets.

Throughout this process, valuation timing plays a critical role, as it directly influences the size of the asset pool.

Unified Lawyers has managed over 300 complex property settlement matters involving real estate, businesses, and unique asset classes, giving clients a strong strategic advantage.

When Is Property Value Assessed During Divorce?

In most cases, property is valued at the time of settlement or final hearing, not at separation.

This approach reflects the understanding that asset values naturally evolve over time and should be assessed closer to the point at which financial ties are formally severed.

The FCFCOA generally requires valuations to be no more than six months old.

This ensures the figures remain accurate and relevant, especially in volatile markets such as Sydney real estate.

Why not use the separation date?

The separation date is important for procedural reasons (e.g., deadlines to file applications), but it does not determine asset values.

The court views the asset pool as dynamic, meaning values can change, assets can be sold, and liabilities can increase or decrease in the time between separation and settlement.

Exceptions :

While the settlement date is the default valuation date, certain exceptions apply :

• Wastage or economic misconduct : If one party deliberately reduces the value of assets (e.g., gambling, reckless spending), the court has the discretion to make a determination that funds considered to have been "wasted" by one party post-separation (excluding day-to-day living expenses) within the appropriate settlement calculations.
• Significant post-separation contributions : If one party increases the value of an asset after separation, such as by renovating a home, they may receive credit.

Ultimately, the valuation timing aims to achieve a fair and practical outcome.

For more information, see the FCFCOA's official guidance on financial matters.

Date of Separation vs. Date of Settlement

The date of separation and the date of settlement serve very different purposes.

Separation date is used for :

• Establishing timelines (e.g., 12 months before filing for divorce)
• Identifying post-separation contributions
• Determining when obligations or financial interdependencies changed

Settlement date is used for :

• Assessing current asset values
• Finalising agreements or court orders

A common misconception among separated couples is that post-separation growth in property value belongs solely to the partner who retains or manages the asset.

This is not automatically true.

Most increases or decreases in value, particularly those due to market forces, are shared because the asset is still part of the joint property pool until settlement.

Example :

If a Sydney home worth $1 million at separation increases to $1.3 million by the time of settlement due to market growth, the $300,000 increase is usually shared.

However, if one party renovated the property after separation and increased its value, the court may recognise this when determining contributions.

This distinction is essential for separated couples who may delay settlement for personal, financial, or logistical reasons.

Prolonged delays can lead to significant value changes, which may either benefit or disadvantage one or both parties.

Why Property Value Is Usually Assessed at the Time of Settlement, Not Separation

Courts assess property value at settlement because it reflects the most accurate and fair representation of the financial circumstances when the division occurs.

Several reasons support this approach :

1. Ensuring fairness

If values were frozen at separation, one party might be unfairly advantaged or disadvantaged by circumstances beyond their control, such as a sudden downturn or surge in property markets.

Freezing values could also ignore the reality that some assets naturally grow over time, like superannuation or investment properties, while others depreciate or require maintenance.

The court's preference for using current values ensures that both parties share in market-driven changes equally, rather than one person absorbing the entire gain or loss simply because they happened to retain the asset after separation.

This approach also supports the principle that both spouses remain financially connected until settlement is finalised, making fairness a central priority.

2. Preventing manipulation or strategic delays

If valuation was fixed earlier, a party could delay proceedings to benefit from favourable market conditions.

Assessing at settlement discourages this behaviour.

It also prevents one party from deliberately slowing disclosure, failing to cooperate with valuations, or stalling negotiations in the hope that the market will shift in their favour.

The court is aware of these potential tactics and uses flexible valuation timing to remove incentives for strategic behaviour.

In more complex cases, such as business valuations, ongoing trading performance may change monthly, making it crucial that values reflect true, recent conditions rather than outdated figures vulnerable to manipulation.

3. Reflecting real-world financial conditions

Property markets can change dramatically over short periods.

Courts want the division to reflect current conditions.

Using settlement-date values allows the court to account for rapid economic developments, such as sudden interest rate hikes, inflationary pressure, construction cost blowouts, or unexpected market corrections.

This is especially important in cities with volatile markets like Sydney, Melbourne, or Brisbane.

Additionally, real-world conditions extend beyond property: business turnover, supply chain disruptions, rental vacancies, and cost-of-living changes may all influence the value of an asset.

By grounding valuations in present-day realities, the court ensures the property pool mirrors the financial landscape the parties are entering, not the one they left months or years earlier.

Example Scenario :

A couple separates in 2023.

Their investment property is worth $900,000 at separation.

By the 2025 settlement date, Sydney property prices increase significantly, and the asset is valued at $1.2 million.

The court uses the $1.2 million value. This may increase the entitlement of the non-owning spouse since the shared pool has grown.

Downward trends :

If the value drops instead (e.g., due to interest rate hikes or economic downturn), the reduced value is shared unless one party caused the loss.

Courts also consider post-separation contributions, giving credit to the partner who maintained, improved, or protected the asset.

This approach promotes equity and discourages disputes about timing.

How Property Valuations Are Determined

Valuations must be accurate, impartial, and professionally prepared.

Depending on the asset type, different valuation methods apply.

Real estate valuations :

These are typically undertaken by independent sworn valuers accredited by the Australian Property Institute (API).

They assess :

• Comparable recent sales
• Property condition
• Location and development potential
• Rental yield (if applicable)

A real estate agent's appraisal is not sufficient for court purposes but may be useful in preliminary negotiations.

Business valuations :

Business valuations are more complex.

Experts may use :

• Discounted cash flow methods
• Capitalisation of future maintainable earnings
• Asset-based methods
• Market-based comparisons

Business performance can change dramatically between separation and settlement, making current valuations crucial.

Superannuation valuations :

Superannuation is often one of the largest assets in a property settlement, and its value can change significantly between separation and settlement.

Super balances fluctuate due to :

• Investment performance (markets rising or falling)
• Ongoing employer contributions
• Voluntary contributions made by either spouse
• Insurance components within the fund
• Administrative or fundrelated decisions

For accumulation funds, valuations are generally straightforward because the balance shown on the member statement represents the current value (subject to daily unit price movements).

However, care must be taken to ensure :

• The balance used is recent (usually within the last 1–3 months)
• Any contributions made postseparation are identified
• Rollovers or withdrawals are accounted for

For defined benefit funds, valuation is more complex. These funds require :

• Actuarial valuation formulas
• Consideration of years of service, salary, and employer contributions
• Projected retirement benefits

Because defined benefit funds are not valued at face value, the actuarial valuation often produces a figure that is substantially different from the amount shown on the member statement.

Updating these valuations close to settlement is critical, especially if the financial circumstances of the member have changed.

Fixed asset valuations :

Fixed assets such as vehicles, machinery, equipment, tools of trade, farm equipment, and specialised commercial items can lose or gain value depending on :

• Market depreciation rates
• Supply availability for replacement parts
• Economic conditions
• Recent upgrades or damage
• Technological obsolescence

In property settlements involving tradespeople, farmers, or business owners, fixed asset valuations can materially affect the overall asset pool.

Courts often require :

• A formal valuation for highvalue equipment
• Evidence of maintenance history
• Photographs and condition reports

Fluctuations in fixed asset values, especially during long delays in settlement, may trigger the need for updated valuations to ensure accuracy.

Joint vs. separate experts

When parties cannot agree on a valuation, the court typically encourages or orders the appointment of a single expert.

A single expert must :

• Be independent and impartial
• Provide a written report complying with the Expert Witness Code of Conduct
• Address all relevant valuation methodologies
• Answer questions jointly put by both parties

Using a single expert usually :

• Reduces delays
• Cuts costs
• Avoids the battle of competing valuers

However, if a party believes the valuation is flawed, for example, the expert used incorrect assumptions or outdated comparable sales, they may :

• Ask written clarification questions
• Seek leave to obtain a shadow expert report (rare and permitted only in limited circumstances)

Accurate valuations form the foundation of a fair property settlement and help create a smoother, more predictable negotiation and litigation process.

What Happens if Property Value Changes Before the Divorce Settlement?

Changes in value, whether increases or decreases, affect the size of the property pool, which in turn affects what each spouse receives.

If property values increase

An increase adds to the pool, which means :

• The non-owning spouse may receive a higher dollar amount
• The owning spouse may need to refinance or pay a larger cash adjustment
• Negotiations may shift in favour of settling sooner rather than later

If property values decrease

A decrease reduces the pool. This can :

• Lower the amount the non-owning spouse receives
• Make it harder for the owning spouse to refinance or retain certainassets
• Lead to disputes about who is responsible for the loss

Responsibility for value changes

If the change results from :

• Market forces → shared equally
• Neglect → may adjust contributions
• Reckless or intentional behaviour → wastage rules may apply

Hypothetical Example :

A couple's rental property valued at $700,000 during separation increases to $850,000 by settlement.

With a 60/40 division, the non-owning spouse receives a share of the increase.

Conversely, if it drops to $600,000,s both parties share the reduced pool, unless one party's actions caused the drop.

Strategically timing settlement in response to market movement can significantly influence outcomes.

Common Reasons Property Values Fluctuate During Divorce

1. Real estate market trends :

Property prices in cities like Sydney can rise or fall due to supply and demand, government policy, immigration patterns, or interest rate movements.

2. Interest rate changes

Increases in interest rates can depress property values and reduce borrowing capacity. This affects refinancing options and the overall settlement outcome.

3. Business performance shifts

Businesses may grow or decline rapidly due to market conditions, competition, or management decisions. This volatility impacts business valuations.

4. Renovations, improvements, or neglect

Upgrades often boost value; neglect can diminish it. Post-separation renovations can influence contribution findings.

5. Natural disasters or external shocks

Floods, bushfires, pandemics, and global financial issues can drastically impact asset values.

6. Supply chain disruptions and economic inflation

These influence materials, construction costs, and business inputs, affecting business and fixed asset values.

7. Depreciation of fixed assets

Vehicles, machinery, and equipment depreciate over time, reducing their value.

Understanding these factors helps separating couples prepare for potential changes and adjust their settlement strategy accordingly.

Family Law Property Valuation Disputes : What to Do

Disagreements about asset values are common, especially when there are large shifts in market conditions or when parties instruct different experts.

Steps to manage valuation disputes :

• Attempt to agree on a single expert to reduce costs and delays.
• Exchange full financial disclosure, including recent valuations, appraisals, and documentation.
• Engage mediation or negotiation to narrow issues.
• Review expert reports for methodology, assumptions, and data accuracy.
• Apply to the court if agreement is not possible; the court may appoint a single expert.

Courts assess experts based on credibility, independence, and adherence to valuation standards.

Cross-examination may occur if reports are contradictory.

Unified Lawyers has resolved a high percentage of valuation disputes before court, helping clients save time and legal costs.

FAQ's

1. What is a valuation date in divorce?

The valuation date is typically the date of settlement or final hearing, when the court assesses the current value of assets.

This ensures the asset pool reflects uptodate market conditions.

In some situations, the court may consider interim valuations if there have been major fluctuations, but the default position remains the current valuation at the time the matter is resolved.

2. Can I choose whether my house is valued at separation or settlement?

No.

Courts generally use settlementdate values unless there are exceptional circumstances such as wastage, postseparation contributions that materially increased value, or misconduct leading to a loss.

Even then, the court does not usually substitute the separation date value; instead, it adjusts contributions to account for the change.

3. What if my property value drops significantly before settlement?

A significant drop in value can feel alarming, especially if the home or investment property is the major asset in the pool.

In most cases, the reduction in value is shared between both parties because it is considered a marketdriven change.

However, the court may depart from this if :

• The drop occurred because one party neglected, damaged, or mismanaged the property.
• One party unreasonably delayed proceedings, causing financial disadvantage.
• The asset would have retained its value but for one party's actions.

If the drop is marketrelated, such as rising interest rates, economic downturn, or reduced buyer demand, both spouses typically share the impact.

You may request an updated valuation before mediation or negotiation to ensure discussions are based on accurate current figures.

4. Can my ex benefit from a rising market if they delayed settlement?

Potentially, yes. Because assets are valued at settlement, delays, intentional or otherwise, may impact the final pool.

If a party deliberately delays to gain an advantage, the court can consider this behaviour when assessing contributions or adjusting the division.

5. What if we already agreed on values but the market changed?

If the agreement is not yet formalised by consent orders or a binding financial agreement (BFA), it may be renegotiated.

Once orders or a BFA are made, the agreement is generally final.

6. Do we need a sworn valuation or will an agent appraisal do?

For court proceedings, a sworn valuation by a certified property valuer is required.

Agent appraisals are acceptable for early negotiations but are rarely relied on in formal settlements.

7. How do business valuations work during divorce?

Businesses require specialised valuation methods and often fluctuate more than real estate.

If business performance changes significantly before settlement, updated valuations may be needed.

8. Can the court disregard a valuation?

Yes. If the court finds a valuation outdated, unreliable, or methodologically flawed, it may order a new valuation or rely on another expert.

9. What if we can't agree on a valuer?

The court can appoint a single expert valuer whose assessment both parties must accept unless compelling evidence suggests otherwise.

10. What does 'wastage' mean in family law?

Wastage refers to situations where one party reduces the value of assets through reckless, negligent, or intentional behaviour.

The court has the discretion to take into account the "wasted" funds within the appropriate settlement calculations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.