Old or new for property investment?

The belief that older properties in established suburbs outperform properties in newer suburbs for capital growth but not necessarily for yield, has been backed up by data from Australian Property Monitors. Their data shows that prices for three bedroom homes in inner suburbs, which are older, have risen by 92 per cent, middle suburbs by 73 percent, and outer suburbs, which are typically the newer ones, by 76 per cent.

One of the points raised by Matthew Hardman, head of portfolio management and research with Rismark, is that with established suburbs you don't get higher capital gains because they are older but because they are closer to the CBD and transport.  He says no new houses are being built in older suburbs and therefore there is less supply.

Matthew Hardman says the reason newer suburbs yield more is simple: yields tend to decrease as prices rise. Prices in newer suburbs tend to be lower, so yield more.