SQM Research report predicts house prices to fall in Sydney, Melbourne, but not Adelaide

An independent data crunch has come up with the best places to invest in bricks and mortar – and it’s not where you think. See where they are.

The top suburbs for property investment in Adelaide have been revealed by a data crunch by an independent researcher – and the results are surprising.

An SQM Research report published on Thursday looks at individual suburbs as well as state and national trends.

It assigns a rating to each suburb for investors, considering a range of factors including short and long-term trends, affordability, the amenity of the area, pricing trends and rental occupancy and yields.

SQM's top five SA locations for investors

St Agnes

Para Hills

Warradale

Seacombe Gardens

Hillcrest

Managing director Louis Christopher’s analysis came up with St Agnes, Para Hills, Warradale, Seacombe Gardens and Hillcrest as the top picks.

The report predicts prices may fall in Sydney and Melbourne next year but Adelaide is expected to continue modest price growth.

SQM managing director Louis Christopher.

“The growth rate in Adelaide has been running at over 20 per cent which is crazily strong,” Mr Christopher said.

“So the forecast for Adelaide next year is 4 to 8 per cent.”

Adelaide was not showing the significant overvaluation evident in Sydney and Melbourne, so prices would moderate, not fall.

“Adelaide is offering good value right now,” he said.

“Prices are tracking in line with incomes in many ways.”

Banking watchdog the Australian Prudential Regulatory Authority would have to intervene to cool lending, even though the Reserve Bank of Australia has flagged it won’t lift interest rates in the short term, he said.

The overheated property market must be cooled, SQM Research says.

“To ensure a soft landing for the market, it is best we see additional intervention sooner rather than later to rein in property valuations,” Mr Christopher said.

The SQM report is consistent with bank economists which also expect prices nationally to fall next year.

But on Monday, CBA Research predicted an 8 per cent fall in Adelaide prices next year.

ANZ and Westpac also expect prices are at or near a peak, with falls due in 2022.

Last month, Canstar’s inaugural Rising Stars Property Report, written with property expert and Hotspotting founder Terry Ryder, identified Adelaide’s 10 most promising locations for price growth in 2022.