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Studio Apartments in Crisis – Are the Smallest Apartments Still a Sensible Investment?

Prices for studio apartments completed between 2017 and 2022 have fallen by about 20 percent in the Helsinki metropolitan area. Maintenance fees have risen by nearly 50 percent. In Espoo, a studio apartment now sells more slowly than a single-family home. How did we get here—and what should an investor do if they have studio apartments in their portfolio?

The standard guide to real estate investing in Finland has long advised starting with a studio apartment. A small apartment is easy to manage; tenants can be found among students and young professionals; and the higher price per square meter has meant a better rental yield than with larger apartments. This logic held true for years. By the summer of 2026, it will no longer apply in the same way.

This isn’t just a temporary economic downturn that will correct itself as interest rates fall. The challenges facing studio apartments are largely structural—they stem from how and where these units were built during the years of low interest rates. That is why they should be examined as a phenomenon in their own right, not just as part of the general market downturn.

Reverse market: Small companies sell more slowly than large ones

The clearest indication of the exceptional status of studio apartments can be found in their time on the market. According to statistics from the Central Federation of Real Estate Agencies for May 2026, studio apartments in Espoo had the longest time on the market, averaging 144 days. Detached homes in the same city changed hands in 111 days—that is, significantly faster. In Vantaa, the time it took to sell a studio apartment was even longer, at 148 days.

This trend is exceptional. Traditionally, small apartments have been the most liquid segment of the market: throughout the 2010s, studio apartments in apartment buildings in the Helsinki metropolitan area typically sold in about 40 days, while larger apartments and single-family homes took months to sell. Now the relationship has been turned on its head. When the smallest and traditionally easiest-to-sell type of housing becomes the slowest to sell, this is not a random fluctuation but a structural shift in demand.

The underlying cause is a general slowdown in the housing market—in May 2026, the number of home sales nationwide was as low as it had been in 2002—but the slowdown has hit studio apartments harder than other types of housing.

How did the studio apartment crisis come about?

The crisis is the result of the combined effects of several factors, and these factors have reinforced one another.

Overbuilding.Between 2015 and 2022, construction of small apartments was exceptionally brisk. Construction companies favored studio and one-bedroom apartments because investor demand was strong and financing was cheap. The result is a massive oversupply, particularly in the rental markets of the largest cities. According to the Finnish Landlords’ Association, the supply of privately financed rental apartments reached a record high nationwide in 2025, averaging about 34,300 units, and the supply in the largest cities has hardly decreased. In the 2020s alone, an estimated surplus of about 24,000 apartments has emerged in the six largest cities relative to the growth in the number of households. The clearest single example is Tampere, which has been called Finland’s “studio apartment capital”: so many small apartments were built, driven by investors, that in 2021 the city began to specifically steer construction toward a more diverse mix—with modest results so far.

A sharp rise in maintenance fees.In housing cooperatives with relatively new studio apartments, maintenance fees have risen by nearly 50 percent since 2021. The increase is due to rising energy costs, a growing repair backlog, and the fact that in housing complexes with small apartments, there are relatively fewer square meters and fewer owners to share the costs. High maintenance fees directly eat into rental income and simultaneously depress the value of the apartment, as buyers factor future costs into their pricing.

Leasehold risk.A large proportion of the studio apartments built in the 2010s are located on leasehold or optional leasehold land. As land lease agreements approach their renewal dates, the land rent may rise significantly—and this increase is passed directly on to the maintenance fee and, consequently, the value of the apartment. KVKL has pointed out that the sale of studio apartments located on leased land, in particular, has been especially difficult. This is the single most difficult-to-predict risk for a studio apartment investor, as its magnitude often becomes clear only when the agreement is renewed.

Together, these factors create a vicious cycle: oversupply drives down rents and prices; rising maintenance fees and land rents put further downward pressure on them; and the declining price trend deters buyers, which further extends the time it takes to sell a property.

The decline in prices has been exceptionally sharp

Prices for studio apartments completed between 2017 and 2022 have fallen by about 20 percent in the Helsinki metropolitan area in just a few years. The housing market is generally associated with stability, which is precisely why a drop of this magnitude is alarming: it illustrates just how powerful structural factors have been.

This trend is also evident in the differences between cities. In the spring of 2026, prices for used apartments in Turku saw the steepest annual decline among major cities, falling by just under 8 percent—partly because Turku’s housing stock is dominated by small units and the city has experienced a significant oversupply of studio apartments. In Tampere, the annual decline has been significantly more moderate, at just under 3 percent. Tampere suffers from the same oversupply of studio apartments, but its overall market has been supported by exceptionally strong rental and population demand—the city has been at the forefront of rental price growth in recent years. This difference illustrates that “studio apartments” are not a single, homogeneous investment class: the local demand structure plays a major role.

Is there anything good about studio apartments anymore?

The situation isn’t black and white. Some studio apartments are still excellent investment opportunities—but the selection criteria have changed significantly. In the past, it was enough for an apartment to be small and centrally located. Now, the key factors are the lot, the maintenance fee, and the sustainability of demand.

The type of land ownership and the level of maintenance feesserve as the first filter. A studio apartment located on freehold land, where the maintenance fees are reasonable and the housing association’s finances are stable, can still yield a good return. The scale is easy to illustrate: if the maintenance fee is 4 euros per square meter per month, for a 25-square-meter studio apartment that comes to 100 euros a month—which is entirely manageable. If the maintenance fee is 8 euros per square meter or more, it’s difficult to maintain a positive cash flow in almost any market situation. A leased lot combined with a high maintenance fee is a warning sign that shouldn’t be ignored.

Structural demand for a locationis another factor. Studio apartments located in the immediate vicinity of a university or university of applied sciences, near train stations, and along good public transportation routes maintain their rental demand better than more remote properties. The structure of student housing is changing, however—more and more students are looking for larger apartments or shared housing, and demand for family apartments has surpassed that for studio apartments—but in the centers of growth hubs, the underlying demand for small apartments is more sustainable than in outlying areas.

It’s also worth keeping the longer-term picture in mind: the sharp decline in new construction means that hardly any new studio apartments will be completed in the coming years. Over time, this may balance out the oversupply in prime locations—but it won’t save a property whose cost structure is already unsustainable.

What should you do if your portfolio includes studio apartments?

If your portfolio includes studio apartments that combine high maintenance fees with a leased lot, it’s worth conducting a thorough analysis of how the situation is likely to develop. Key questions to consider are: Will the land lease be renewed in the coming years? Are major renovations planned for the building? And in what direction are the maintenance fees trending? Waiting will not automatically improve the situation—if the land lease or renovation costs are rising, the property’s cash flow and value may decline further before they improve.

Selling in a falling market instinctively feels wrong, but it can sometimes be a justified decision—especially when the capital freed up can be directed toward an investment with stronger fundamentals. Realizing an actual loss is rarely a pleasant decision, but a persistently negative cash flow can erode a portfolio’s overall return for years. Conversely, a property where you own the land and the maintenance fees are reasonable is likely worth holding onto, as its problems are temporary rather than structural. The solution, therefore, is not to “remove studio apartments from the portfolio,” but to evaluate each property based on its own fundamentals.

(We discussed the polarization of the market and the oversupply of small apartments in greater detail in our reports*The Real Estate Investor’s Year 2025* and*The Tenant’s Market 2025*.)

Summary

A studio apartment is no longer automatically the easy starting point it has traditionally been portrayed as. Years of overbuilding during the low-interest-rate era, a sharp rise in maintenance fees, and the risk of rising rent have combined to make small apartments the most challenging segment of the market—so much so that in Espoo, a studio apartment sells more slowly than a single-family home.

This does not mean that studio apartments are unsuitable investments. It means that the selection process must be more careful than before: a private lot, reasonable maintenance fees, and sustained demand for the location are what distinguish a good studio apartment from a bad one. The most important skill for an investor is not to avoid this entire type of housing, but to distinguish between properties with temporary issues and those with structural problems.

This article is a general market overview; it is not an investment recommendation nor does it constitute personal investment or tax advice. The figures presented are based on sources available at the time of writing and are subject to change. Decisions regarding individual investments should be made based on your overall financial situation and, if necessary, in consultation with a professional.

Frequently asked questions

Is it still worth investing in a studio apartment in 2026?It is, but only after careful consideration and based on specific criteria. A studio apartment located on owner-occupied land, with moderate maintenance fees and a good location, can still yield a good return. On the other hand, a studio apartment on leased land with high maintenance fees is risky in almost all market conditions.

Why have prices for studio apartments fallen so much?There are three reasons, and they reinforce one another: overbuilding during the years of low interest rates and the resulting oversupply; a nearly 50 percent increase in maintenance fees since 2021; and rising land rents for leased plots. Prices for studio apartments completed between 2017 and 2022 have fallen by about 20 percent in the Helsinki metropolitan area.

What is the risk associated with leased land?A large proportion of the studio apartments built in the 2010s are located on leased land. When the land lease agreement is renewed, the rent may increase significantly and be passed directly on to the maintenance fee, which lowers the value of the apartment. The extent of the risk often isn’t clear until the agreement is renewed, making it difficult to predict.

Should I sell my studio apartment at a loss?It depends on the property’s fundamentals. If the lot is leased, the maintenance fees are high, and you’re facing increases in ground rent or renovation costs, it may make sense to take a loss and reallocate your capital. If you own the land and the maintenance fees are reasonable, it’s probably worth keeping the property. This is not investment advice—you should make your decision based on your own circumstances.

Where do studio apartments fare best?In the heart of growth centers, near universities and universities of applied sciences, and along train stations and good public transportation routes, where rental demand is structurally sustainable.

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