Local banks unwittingly giving the Chinese advantages in Melbourne's prestige suburbs buyers' race: Mal James

Australian banks are really dotting their i’s and crossing their t’s with prestige property lending in 2015, according to the Melbourne buyers' agent Mal James.

"It is obvious that there have been directives from the top through most banking hierarchies," said James.

"Prudential banking is a good thing, just so long as it’s fair and equitable to local buyers as well," he suggested on the issue of offshore borrowings versus local.

He added the banks will lend if local buyers get in shape – with the right valuations, right loan to value ratios and updated earnings figures.

"Many Chinese buyers have worked out agent quoting, but some local buyers appear to have not.

"Chinese buyers have in many cases no real contact with agents and in many cases can’t even speak English, yet they are able to buy well and locals are not.

"Chinese buyers form their own opinions on values or get assistance from their friends or buyer advocates.

"Local buyers listen to agents, who fill their heads with mush."

A James Buyers Agency graphic (above) was used to show in red the agent quote on offerings in Brighton, Kew and Hawthorn.

The orange is the Chinese bidding which was consistently high across the board. He said his agency had some Chinese buyers on its books.

The blue is what Mal James bid and the black boxes is the range James Buyer Advocates gave to its clients the week before the auction on where it felt the home would sell.

"See how consistent it is with three different agents on three different homes in three different suburbs," said James.

"During the first few weeks of 2015 it was understandable for agents and advocates and buyers to get it wrong as the market shifted big time and yes, agents and advocates can’t get it right every time (but they shouldn’t get it wrong every time either)."

He noted many were underestimating the power of the inner Melbourne prestige market, saying "they think it is an aberration.

"We do not share that view while the fundamentals are so obvious and so strong.

"Of course we have no idea how long it will last but the bidder depth from overseas buyers is as David Hart from Brighton Buxton described it – 'profound'."

He advised values change dramatically with:

+ Building Quality
+ Chinese Bidding
+ Better Precincts
+ Building Size
+ Auction Volcano Interest
- Poor Floor plan
- Poor Land Features
- Poorer Precincts
- High Vendors

James also noted some houses - especially ones that cannot be bulldozed are actually discounting their land value; "such is the insatiable appetite by overseas buyers for land you can build on."