This is in Melbourne, where most homes are sold via auction (because of the limited supply)... lots of people are forgoing building inspections because of it. Wouldnt be surprised if he didnt do one.
It could be sold as an "as-is", intended for knockdown/ demolition and replacement, or removal. That's why the 20% minimum open space requirements for new homes.
Inspector wound't have had any reason to mention it. They care about structural issues.
The foundation is still clearly visible, they could do their job despite the railway. And they wouldn't have known that others didn't know it was there.
Home inspectors (at least in Australia) are next to useless and expensive. The one I bought a report from never looked under the house or in the attic.
In the US the quality has varied widely over the few houses I’ve purchased over the years. I’m also skeptical of their aligned interests. In the US most home purchases take place with a real estate agent involved. An inspector that adds friction to the process won’t get recommendations from agents.
My experience here in the UK, despite getting the highest "tier" of survey carried out on my (current) home when buying it, was that within the 74 page report they produced, there were at least a dozen occurrences of the surveyors recommending a "specialist".
They avoid any liability by saying, "we couldn't survey under the floor", we recommend getting in a specialist. "we can't assess the roof structure", we recommend getting a specialist.
By the time all was said and done, we were looking at tens of thousands of pounds in further "specialist" surveys, which nobody realistically is going to do only to decide after that you won't buy the house.
I can imagine once you're looking at houses priced in the millions it might make sense, but blowing the equivalent of your deposit just isn't tenable.
My home inspection report was two pages of useful information (here’s where the water shutoff is, the breaker panel is here), a page with two actual real issues (garage door opener didn’t work, kitchen foundation was settling) and then ten to twenty pages of “we don’t look at shit” legalese.
They specifically disclaim being experts in damn near everything.
If you want a real inspection you hire two or three building contractors to do it. I’d go with a general, a roofer, and an electrician. If I cared.