Canada has suffered from a housing crisis for years, with few homes for sale, prices rising, and demand outstripping supply. As home ownership becomes less achievable for many Canadians, new alternatives are gaining traction. Among them, shared equity stands out as an innovative approach to making home ownership more accessible.
Canada’s housing affordability crisis has hit critical mass. From 2017 to 2024, the country’s population increased by almost 3 million, but the supply of affordable housing did not keep up. Stringent regulatory barriers, rising construction costs, and a spike in demand, all fueled by the COVID-19 pandemic, have led to soaring home prices.
“In cities like Toronto and Vancouver, young professionals and low-income families are having a very hard time entering the housing market,” says Adam Gant, a real estate expert and Advisor at REAfe Advisory in BC. “Many are left to either keep renting at historically high prices or postpone home ownership indefinitely.”
Shared equity is a financial partnership between a homeowner and an investor to purchase a property. Rather than taking on the entire financial load, the buyer and investor divide ownership, lowering the initial cost and mortgage requirements.
This approach has been implemented in several countries with great success. Government-backed shared equity programs in Singapore, the UK, and Australia have allowed thousands of people to achieve home ownership with a fraction of the down payment that would traditionally be required. The concept is now gaining traction in Canada as a potential solution to affordability issues.
Shared equity has the primary benefit of lowering barriers to home ownership. Traditional mortgages come with high down-payment requirements, as much as 20%, which can be a barrier to entry for young buyers or middle-class families. Shared equity programs enable people to get into the market with just 1% to 5% of a home’s value, thus relieving some of the financial burden.
“This model allows buyers to build equity over time instead of being stuck in the rental cycle. Even if they don’t own the whole house outright, they still have the benefits of accruing property value and stability,” Gant explains.
There is also a risk-sharing aspect to shared equity. Investors partake in the potential profits and losses, which provides buyers with more financial security. Additionally, this model may serve as an incentive for developers to build more housing units, as a greater proportion of low-income families would have increased access, creating more demand.
Shared equity has wider economic benefits beyond assisting individual buyers. Expanding the housing market would drive demand for new housing development and thus encourage construction and supply. Over time, this may help lower housing prices and ease the pressure on the rental market.
“Making home ownership more attainable allows greater pressure to be lifted from rental markets, which could lower rental prices and significantly help reduce homelessness. It’s a win for communities and buyers alike,” Gant says.
The shared equity model is a promising one for Canada. Its success will depend on a combination of government initiatives, private sector involvement, and public awareness. With the right collaboration between policymakers, investors, and developers, shared equity can have a real impact.
“If we embrace shared equity more broadly, we can help home ownership become a reality for many people who have been pushed out. It’s time for new solutions to change the future of Canada’s housing market,” Gant concludes.
With housing challenges remaining, shared equity is one of the few practical and scalable solutions to address housing affordability. If properly supported, it could change the nature of home ownership in Canada, opening the door to many more buyers and establishing long-term financial stability.
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