9 warning signs to look out for when buying a property

9 November 2020
From a glut of ‘For sale’ signs to vacant lots nearby here’s an insider’s guide to some of the things to watch out for when buying a property.

Buying a property is often one of life’s biggest financial decisions. Here’s a look at nine key warning signs to consider carefully before pulling the trigger on a prospective purchase.

1. The property fails a building inspection

There are any number of cosmetic and structural issues which can arise when looking at properties to buy. These can include water damage, cracked walls, uneven floors, roof, or ceiling damage – all of which can be tricky to assess if you’re unqualified.

Perhaps the single most important piece of due diligence property buyers can carry out is to commission a building and pest inspection and for strata-titled properties, a body corporate or strata search report.

Structural issues can be extremely expensive headaches. If the inspection shows problems you may want to think twice before buying.

2. A glut of ‘For sale’ signs

Walk the local streets to get a feel for how much property is advertised as ‘For sale’ or ‘For lease’. A moderate number of signboards can be indicative of a healthy and functioning local housing market.

A glut of signs, on the other hand, may signal an oversupply of rental properties relative to demand, or perhaps a more serious issue. For example, is the area simply becoming unpopular due to noise or other local issues?

3. An oversupply of units

Some parts of Australia have suffered from overbuilding of new apartments and this will tend to have a negative impact on price growth (and rents for prospective landlords) over time .

The table below from our recent oversupply hotspots report reveals some of the areas at risk. For example, the centre of Melbourne has seen a very high rate of construction in recent years, and with border closures vacancy rates have increased to record highs, so buyer caution may be warranted.

State Suburb New units
next 24 months
New units next 24 months
as percentage
of units
Victoria Melbourne 4,744 13.6%
Victoria Docklands 1,307 12.0%
NSW Mascot 804 13.3%
NSW Rouse Hill 1,661 200.4%
NSW Parramatta 1,553 13.2%
NSW Gosford 1,859 72.9%
NT Darwin 1,204 32.0%
Queensland West End 1,211 26.0%
Queensland Surfers Paradise 2,779 15.0%
South Australia Adelaide 1,266 12.9%

Generally speaking you will be better served to look for points of scarcity – such as finding a unit with a view – and to aim to buy in areas where height restrictions will limit the supply of new development.

Lower-quality apartments that have been constructed with investors rather than owner-occupiers in mind have tended to be smaller internally and lacking in scarcity value, making them likely to be poor performers from a price growth perspective.

4. A large volume of developments

Check development approvals for the local area to determine whether any major new projects are planned or expected. Where major apartment projects are approved then this information will be publicly available in your state or territory, so it’s worth checking to see what plans are in the pipeline.

If there is a high volume of new properties approved then this can potentially suppress price growth and rents in the local area.

5. Vacant lots nearby

If there are vacant blocks of land close to the home you want to buy you should consider why this is the case – and what might be built there in the future.

Not all vacant land can be built upon – this depends on how the land is zoned. But generally speaking, if there are vacant blocks then that means future building, and potentially some related disruption and noise.

If the land is zoned as low density, then you can expect only single dwelling construction. However, where there is vacant land zoned for medium or higher density development then there could be significant new supply and construction to take into account.

6. A lot of noise

When visiting a property for the first time it pays to consider how noisy the property might be, at all times of the week.

For example, if the home is close to a restaurant precinct or commercial premises, will there be noise in the evenings? What about road noise, or sounds from other nearby or adjoining dwellings?

7. High turnover rate

Be sure to check out the ownership history of any property you’re looking to buy. You can only truly know what it’s like to live somewhere through doing it, and a high turnover rate of ownership may be an indication that the liveability factor is not all as it seems.

8. Problems accessing all areas

Be mindful of areas within a property which can’t be accessed, for issues may lie within. For example, pest inspectors can’t give you full clearance of termite or ‘white ant’ activity when they can’t inspect all areas.

9. Extensions that have not been approved

Keep an eye out for extensions or non-standard additions to a property, such as a new carport, and check whether any work done has been appropriately certified. Where work is not compliant, you could become liable for remedying the uncertified changes.

If you’re not sure, a building inspector and your solicitor or conveyancer can help to advise you on the status of any relevant approvals.

Tread carefully

As the saying goes: “Act in haste; repent at leisure”. You don’t need to be paranoid about buying property, provided you take a systematic approach and carry out the appropriate due diligence.

Take your time before making a property purchase decision, because rash decisions are not easily undone.

Tread carefully, and best of luck with your property search.


Cover image source: sirtravelalot (Shutterstock)

This article was reviewed by Editorial Campaigns Manager Maria Bekiaris before it was published as part of our fact-checking process.


Pete WargentAbout Pete Wargent

Pete Wargent is the co-founder of BuyersBuyers.com.au, Australia’s first online marketplace affordable property buying services available to all Australian homebuyers. As a property buyer’s agent, strategist, and mentor, Pete has a decade of industry experience.

He is a Chartered Accountant with Fellowship and is well known in Australia through his extensive television and media presence. He is also the author of six books. Follow him on Twitter.



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