Buying a property is often one of life's biggest financial decisions.
Here's a look at 8 key warning signs to consider carefully before pulling the trigger on a prospective purchase:
1 – Solid foundations
There are any number of cosmetic and structural issues which can arise when searching properties to buy: water damage, cracked walls, uneven floors, roof, or ceiling damage…all of which can be tricky to assess for the unqualified.
Perhaps the single most important piece of due diligence property buyers can carry out it to commission and building and pest inspection (and for strata-titled properties, a body corporate or strata search report).
Structural issues can be extremely expensive headaches, so you simply must avoid these!
2 – 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.
3 – Seeking approval
As noted in our recent oversupply hotspots report, some regions of Australia have suffered from chronic overbuilding of new apartments, and this will tend to have a negative impact on price growth over time (and rents for prospective landlords).
Check development approvals for the local area and determine whether any major new projects are planned or expected.
Generally speaking you will be better served to look for points of scarcity – such as finding a unit with a view, for example – and to aim to buy in areas where height restrictions will limit the supply of new development.
Lower quality apartments which 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 poor performers from a price growth perspective.
4 – Empty as a vacant lot
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!
5 – Making noises
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?
6 – Not getting owned
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!
7 – Access 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.
Beware of hidden problems!
8 – And, by extension…
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.
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.
Of course, a professional buyer's agent can help you with some or all the steps if you're inexperienced or unsure.
Take your time before making a property purchase decision, because rash decisions are not easily undone in an illiquid market.
Tread carefully, and best of luck with your property search!