Abstract

Demographic change is affecting almost all developed countries and many developing countries. Its most evident characteristic is population ageing. Many countries, including the UK, are experiencing a particularly rapid growth in the numbers of "oldest old" – those aged 85 and above who are likely to exhibit various symptoms of frailty. A likely consequence of more rapid population growth among the “oldest old” is increased demand for long-term care.

In the UK, the number of disabled older people in households receiving informal care is projected to increase by 102%, from approximately 1.75 million in 2005, to over 3.5 million in 2041. The incidence of long-term care provision is greater than zero for all age groups, but is particularly high among the very old. Long-term care is provided in a variety of accommodation types. These include long-term hospitals including geriatric hospitals, residential and nursing homes, specialised forms of housing and private dwellings. In the economics literature, attention has tended to focus on how care needs are met. Unlike health care needs, many long-term care needs can be met by individuals that do not have specific skills – such as family and friends. Thus, attention has focussed on how household arrangements influence care provision. Relatively little attention has been given to the supply and demand of accommodation suitable for the provision of care, even though this has spill over effects on the private housing market.

This paper extends previous research on long-term care by focussing on the accommodation requirements of different forms of care provision and their consequent effects on the housing market. It suggests that the trend in OECD countries towards long-term care at home rather than in institutional settings – residential or nursing homes – will raise the demand for private housing and have distributional consequences. Demographic change will amplify these effects. Empirical analysis shows that household formation effects involving those requiring long-term care are relatively weak and therefore unlikely to significantly offset the upward pressure on housing demand caused by increases in the numbers of frail older people receiving care in their own homes.

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