In this paper, we describe a novel technique, which shows a high potential for defect densities and stress reduction in SiC and GaN, both epitaxial and bulk. This technique is based on nanometer scale epitaxial lateral overgrowth (NELOG) method, which employs porous substrate materials. This technique does not require any mask and may be easily scaled for large area substrates. SiC layers were grown on porous SIC by sublimation sandwich method. Porous SiC substrates were formed by surface anodization of SiC commercial wafers. GaN layers were overgrown by hydride vapour phase epitaxy on porous GaN. Porous GaN was formed by anodization of single crystal GaN layers grown previously on SiC substrates. Epitaxial layers grown on porous buffer layers were investigated in terms of crystal structure, residual stress, and optical properties.