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Long-Term Care and the Housing Market

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  • David Bell
  • Alasdair Rutherford

Abstract

This paper examines the combined effects of population ageing and changes in long-term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long-term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.
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  • David Bell & Alasdair Rutherford, 2012. "Long-Term Care and the Housing Market," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(5), pages 543-563, November.
    • Handle: RePEc:bla:scotjp:v:59:y:2012:i:5:p:543-563
    DOI: 10.1111/j.1467-9485.2012.00594.x
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    1. Creina Day, 2018. "Population and house prices in the United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(2), pages 127-141, May.
    2. Costa-Font, Joan & Frank, Richard G. & Swartz, Katherine, 2019. "Access to long term care after a wealth shock: Evidence from the housing bubble and burst," The Journal of the Economics of Ageing, Elsevier, vol. 13(C), pages 103-110.
    3. Day, Creina, 2019. "House prices post-GFC: More household debt for longer," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 91-102.
    4. Geoffrey Meen, 2016. "Spatial housing economics: A survey," Urban Studies, Urban Studies Journal Limited, vol. 53(10), pages 1987-2003, August.

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