Our banks are not being fair on local buyers: Mal James
We have been advising our clients for some time that the banks have become harder to deal with, than this time last year. Since those comments we have introduced internal measures to help our buying clients AND the banks have put investor rates up. Ok, the banks are being prudent, aren’t they?
Yes, but hey, there is a bigger picture here that the banks and the government are not seeing or maybe are choosing to ignore.
Are banks being fair to locals?
Question: Are our local banks involved in some form of inadvertent, bizarre reverse prejudice by pulling interest rate and other restrictive lending levers for locals.
As any local buyer will acknowledge, it is already very difficult to compete against the huge Asian inflow of money. Asian buyers have more financial options eg currency swapping, than the local Australian buyers do.
Are we seeing a repeat of the 1960s where the banks wanted to encourage new building, so they made it easy for locals to borrow to build new in Doncaster, while making it more difficult for locals to borrow and buy second hand in Albert Park? The Greek and Italian migrants who at the time had more money raising abilities than the locals, took full advantage of this when walking off the boat and bought en masse in Albert Park, Port Melbourne and Middle Park with minimal competition.
The Asian buying influx is a lot, lot bigger now than the Greek and Italian influx of those times.
Since the FIRB changes of 2009 which opened and never shut the floodgates to overseas investment, large amounts of land and huge numbers of established homes in Inner Melbourne have been and are continuing to be bought by overseas investors. This seems to be what the Australian governments of both political persuasions want – ok, that is the government’s call – that’s not the point of this article – that’s for another time.
Our policy at James is clear – we act for local and overseas clients without internal policy bias.
Our point is that the locals (your children and my children) need to be on as level a playing field as possible when it comes to being able to compete against buyers from Asia.
Otherwise the banks/governments maybe subjecting some of our clients, locals, your/my children etc to a form of bias which we find totally unacceptable and outside our values of Australian fair play.
The banks, for no doubt very good reasons in their mind, are making it harder for locals to buy – but they may not slow the surge, as they intend. All they may do, is make it a lot easier for overseas buyers to buy near schools, buy in good streets, buy the established homes; as fewer local buyers have the ability to compete against the more sophisticated money from China and other Asian countries.
We think this is seriously unfair on local Australians if it plays out as it looks like it may.
Local banks need to be helping local buyers, not making it harder – guys, it’s already bloody hard enough for local buyers.
When are people of influence going to stand up for our children and for local buyers – who want to live locally.
If the government and banks want the market to ease, go to the source of the creation – huge and unabated overseas demand.
Banking leaders please look at what you may be inadvertently doing if you carry on your latest policy directions.
This current market is not being driven by local interest rates – this current market is being driven by overseas demand and if you continue to weaken the local competition by restricting their ability to borrow (which no doubt is based on good intentions); all you may be doing is making it even easier for overseas buyers to buy, while making it harder for some of our clients, locals and our/your children to buy.
Is that fair? No, it is not fair.
Mal writes weekly auction reports, advice and in-depth market analysis on James' website.
