The investment attitudes of lay residential investors in a post-socialist context: rational attitudes or simplified heuristics?

This article describes the socioeconomic characteristics of Czech small-scale or lay re Two respondents were not specifically thinking about investing in residential property sidential investors (LRI) and assesses their investment attitudes. We use a mixed-method research design that combines an analysis of quantitative survey data with qualitative in-depth interviews. The results show that LRI often use simplified heuristics to justify investment decisions, i.e. they uncritically adhere to a social norm about residential investment as the best type of investment, and they have unreasonably optimistic housing price expectations, average knowledge of facts, and a low level of financial literacy. While such heuristics may sometimes be beneficial for a society and are understandable in conditions of uncertainty, they may also contribute to housing price predictability, excessive price volatility, and, consequently, future systemic market risks. Moreover, no significant difference has been observed between older (existing) and young (potential) investors.