Forget the Gold Coast, it's regional Queensland leading the charge

There has been broad agreement among analysts that this will be the year of Brisbane, but it's regional Queensland leading the charge in 2014.

Most commentators, especially the chattering economists, focus exclusively on the capital cities in their "analysis" of real estate in Australia. The regions seldom rate a mention, other than an habitual obsession with bad news areas like the Gold Coast.

Property investors also tend to overlook the regions - and that's to their detriment. Over the years surveys have found most investors believe you have to buy in capital cities to get capital growth. But regional centres offer the potential for a win-win-win situation: cheaper prices, better rental yields and excellent potential for capital growth (assuming you buy wisely).

In Queensland in particular, regional cities must always be considered. Queensland is the most decentralised state and has a line-up of strong regional cities that matter both economically and in a real estate sense: Townsville, Toowoomba, Rockhampton, Cairns, the Sunshine Coast, Gladstone, Mackay ... and, yes, even the Gold Coast, though it's more of a theme park than a city.

The latest figures from the Real Estate Institute of Queensland indicate that Brisbane overall hasn't moved a great deal but many of the regional cities have.

Since the middle of last year I have been recommending that investors consider some of Queensland's coastal cities which have been poor performers in recent years but are now moving into growth phases.

These include Cairns, the Sunshine Coast and Hervey Bay. These places have a number of things in common - economies that have struggled in the past through over-reliance on tourism and property markets weighed down by over-supply.

Their recoveries have common features as well - a big increase in infrastructure spending, efforts to diversify their economies, absorption of the previous accommodation surpluses and recovery in tourism markets. These places have been at the forefront of Queensland price growth in the early part of 2014.

I have spoken to investors who own Cairns property and have only negative things to say about the city's market. But that's the past and hotspotting is about perceiving the future. And, in line with our forecasting, Cairns was Queensland's leading performer in the March quarter - it's median house price rose 5.6%.

Hervey Bay rose about 3%, as did Rockhampton, while the Sunshine Coast improved 2% in the quarter, as did Townsville.

The Gold Coast rose 4% and is now back on a growth path after five years of decline. There's plenty of infrastructure spending happening there as well and normally I would have such a place on my good list.

But the coast's miserable capital growth history, thanks to continual bouts of over-supply, counts against it - particularly with the level of new supply in the pipeline.

Every week brings new announcements of new skyscrapers. The Gold Coast is gearing up to repeat the mistakes of the past.

I'd rather own real estate in a city of substance like Toowoomba than a place of froth and bubble like the Gold Coast.

You can contact Terry via email or on Twitter.

Photo of Townsville at night: Creative Commons.