Hoping you can help clarify a conundrum I have been nutting over. I have spoken to many "experienced property investors" about this and noone seems to be able to give me a straight answer.
The conundrum I have is this. The generally accepted rule of thumb for property investing (at least in Melbourne) is to buy a property within 10 kilometres of the CBD. These properties are said to appreciate better over time compared to middle and outer suburban properties. Eg; If you are after capital growth, as a rule, you should look within the "10k zone".
The problem with that rule however is that if all properties within 10 kilometres of the CBD experienced continually compounding growth, at a greater rate than their outer suburban partners, the price gap would grow exponentially.
Can anyone explain this simple problem to me? Maybe I am too enquisitive or too silly to realise a basic mistake in my reasoning?
Thanks for any light you can shed.