I don't agree that "we've all benefitted from rises in property values" as we all have to live somewhere, and the only way to get money from your house, would be to sell it and buy a minute flat, or move from London and the South East to the Outer Hebrides. We tend to live near our family and friends and would not particularly want to move to a cheaper area, just to get the profit from our house. Anyway, most areas are expensive now. The bigger the house you own, the more Council Tax you have to pay.
I think that people like to pass their house on to their children, because it means their hard work through the years is directly benefitting their heirs. If people realise that their children are unlikely to inherit anything because of Care Home fees, then future generations might not bother to save up and buy property, as there will be no motivation.
It is quite a struggle nowadays, making sure your children make it through University without getting into debt, and then helping them to save up enough money, to scrape up a deposit on their first house. Everyone talks about family values nowadays. Surely one generation helping the older and younger generations, financially and emotionally, is an important part of living. If parents leave some money or property to their offspring, then it will eventually filter through to their children, which means that the State doesn't need to worry about them. Obviously this income is taxed like any other income.
Kayla