The great Australian dream of owning your own home has become a nightmare and we are falling behind the rest of the world.

The sharp fall in home ownership has been revealed in a new report, No place like home: the impact of declining home ownership on retirement.

The alarming findings show more and more Australians will retire either never owning their own home or carrying a hefty mortgage debt.

Written by independent economist Saul Eslake, and commissioned by the Australian Institute of Superannuation Trustees, the report also found we don’t compare well to the rest of the world — our home ownership rate is 27th globally, behind countries including Romania, Croatia, Spain, Greece, Portugal, Italy, Sweden and Canada.

However it’s not all doom and gloom for Ascot couple Kate Stoddart, 28, and Michael McGuire, 32, who own their three-bedroom Beatrice Tce home and say it is a dream come true.

The couple were searching for the right property for about 12 to 18 months and said they were mindful of being patient throughout the process.

Ms Stoddart opened up a house savings bank account when she was 18 and said she was “stoked” she could now tick off the home ownership box.

She said it was important for them to own a home with their future and retirement years in mind.

Mr Eslake said many more people would need to dip into their super at retirement to wipe out outstanding home loan debt.

“We are on the cusp of seeing a significant increase in the number of people aged 65 and over who still have some mortgage debt,’’ he said.

“Or, alternatively, what will continue to happen is that when people reach retirement age they use their super to pay off their mortgage. In turn that will mean their super won’t do what it is meant to do.”

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The report revealed substantial rises in the proportion of homeowners aged between 35 and 64 who still have outstanding home loan debt, much of it fuelled by soaring prices and more people taking on much larger loans.

For those nearing retirement (aged 55-65), about 45 per cent have mortgage debt, up from 29 per cent in 1995-96.

And for homeowners aged over 65, about 10 per cent have outstanding debt, which has more than doubled from about 4 per cent in 1995-96.

The Australian Institution of Superannuation Trustees chief executive officer Eva Scheerlinck said the home ownership slide would continue to put more pressure on superannuation savings and lead to more reliance on the aged pension.

“Increasing numbers of retirees will use some, if not all, of their superannuation to discharge their outstanding mortgage, which in turn will see more people rely on the aged pension,’’ she said.

“We need to look at mortgage lending criteria. Are there ways that we can provide some sort of incentive for pensioners to downsize from their large homes into smaller homes and exempting them from stamp duty for example?”

She also quashed the idea to allow first-home buyers to use their super to buy property and said it would merely inflate house prices even further.

— Additional reporting by Sophie Elsworth