'One in four' to retire without home ownership

Superannuation will become the biggest investment for Australians if the nation's historically high rates of home ownership erode further, REST Industry Super says.

Home ownership rates have been stable at about 70 per cent for decades, and the needle had not moved by 2008, figures from the Australian Bureau of Statistics show.

The US, UK, Canada and New Zealand have similar rates, while those of Italy, Spain and Poland are between 82 and 96 per cent.

By retirement age, 80 per cent of Australians usually hold title to residential property.

In 2007/08, 78 per cent of those aged over 65 owned their home outright, while five per cent were still paying a mortgage.

REST defines home ownership as either owning or paying a mortgage on their primary place of residence, but excludes investment properties.

The super fund estimates the current ownership level is 85 per cent of retirees, and will revert back to 80 per cent in the next 15 years, dropping to 75 per cent by 2036 - meaning one in four will retire without owning a home.

Lower housing affordability and higher interest rates dragged home ownership rates among Australians under 35 years down from 45 per cent in 1995/96 to 37 per cent in 2007/08 and was on track to reach just 33 per cent this year, REST said.

Given 78 per cent of retirement savings comprise a home and other property assets, a gradual erosion of one of the three key pillars of the national retirement income policy is taking place, REST says.

Savings and superannuation form the other two pillars.

By 2007, only 12 per cent of Australians aged between 25 and 34 years did not have superannuation coverage, REST says.

Of those who did, 27 per cent had a balance above $25,000.

Among 35 to 44-year-olds, the median balance was $32,283 and almost half were completely reliant on employer contributions to super.

For those aged between 55 and 64 years, the median balance was $70,000.