Using the house to fund ageing in place

Abstract

Increasingly governments of countries where homeownership is high are looking to housing assets to fund long-term care. Housing wealth can be viewed both as an asset for low-income older homeowners and by government as having potential as an asset base for purchasing support services or supplementing income. However, there are several key factors impacting the comparative home equity release options available to older people and these in turn have important policy implications for retirement decisions. For instance, good policy decisions require an understanding of issues pertaining to: national retirement and homeownership patterns; retirement income; the types of equity release products available; and the economic drivers impacting the home equity market. Further, the global recession has impacted retirement savings, and so both the financial market and older people are concerned about stalled housing prices in some areas and slashed economic growth forecasts. Specifically, a lack of liquidity has severely impacted the financial services sector internationally and has narrowed the choices available. The type and degree of regulation varies among countries that offer equity release products. A systematic and policy review funded by the Australian Housing and Urban Research Institute forms the basis of this paper. This paper will use the commissioned Australian work to discuss the benefits and dangers of well-established equity release markets, national regulation and will overview the key policy drivers operating in the aftermath of the global financial crisis.