September Property Update 2025: The 5% Deposit Scheme, First Home vs Investment, and Finding Growth Locations with Arjun Paliwal

By Molly Benjamin, Founder of Ladies Finance Club

Listen to the full podcast here.

The Australian property market is buzzing this month, with headlines dominated by the new 5% deposit scheme for first home buyers. To unpack what this means for everyday Australians, I sat down with Arjun Paliwal, CEO of InvestorKit, on the Get Rich podcast. Together, we explored whether it’s smarter to buy your first home or an investment property, the impact on property prices, and the data behind finding the next growth locations.

The 5% Deposit Scheme Explained

From October 1st, eligible first home buyers in New South Wales can purchase properties worth up to $1.5 million with only a 5% deposit. Even at the $800k mark, where stamp duty exemptions also apply, buyers only need around $42,000 in savings to get started (covering the deposit plus legal and building costs).

While this dramatically lowers the savings hurdle, Arjun warns it will likely push up property prices over time. The good news? It won’t be overnight. Property prices shift gradually, following comparable sales, meaning those who act earlier will benefit the most.

First Home or Investment Property?

One of the biggest dilemmas our community raised is whether to buy a first home to live in, or jump straight into investment properties.

Arjun’s advice:

• If the property ticks three boxes — livable for you, eligible under the 5% scheme, and in a location with strong growth potential — then buying a first home makes sense.
  
• But if you’re compromising on those factors, an investment strategy in a high-growth market may give you a better financial return long term.
  

Too often, people buy units close to cafés or “lifestyle suburbs” that don’t grow, while regional houses in the same price range have surged by hundreds of thousands.

Paying Off the Mortgage vs Investing

Another common question was whether to focus on paying down your mortgage or buy an investment property. According to Arjun, the answer depends on your financial planning strategy:

• If you only have the cash flow to reduce your mortgage, stick with that.
  
• But if you can afford both repayments and a deposit, investing creates compounding growth across multiple assets.
  

He also introduced the concept of debt recycling, paying down your home loan with savings, then redrawing that equity for an investment purchase. This allows you to reduce non-deductible debt on your home while turning it into deductible investment debt. It’s a strategy worth discussing with your broker or accountant if you’re serious about wealth building.

Where Are the Growth Locations?

The big question for anyone eyeing the next opportunity is: where are the growth spots in the real estate market right now? Arjun highlighted the importance of competition as the key driver. Look for:

• Auction clearance rates above 70%
  
• Low property supply compared to five-year averages
  
• Reduced vendor discounting and faster sales times
  

These data points point to undersupplied markets where demand is building — the perfect setup for capital growth.

Mortgage Advice and Borrowing Power

We also touched on the impact of kids on borrowing power. The short answer: yes, the more dependents you have, the more it reduces your ability to borrow. Credit card limits and student loans also play a role. This is why mortgage advice from brokers is invaluable when planning your next step.

The September 2025 property market update is clear:

• The 5% deposit scheme is a game changer for first home buyers, but it will also fuel rising prices over time.
  
• Smart investment strategies like rentvesting or debt recycling can help you build long-term wealth while balancing your mortgage.
  
• Growth locations can be found by tracking property trends and understanding where competition is strongest.
  

Whether you’re considering home buying tips for your first property or looking to diversify your investment properties, the message is simple, don’t wait for the “perfect time.” With the right financial planning and professional advice, you can start making confident moves in today’s market.

Plus, a huge shoutout to our sponsor, InvestorKit! Australia’s #1 Buyers Agency for 2023 and 2024. They specialise in helping investors find high-growth properties utilising industry leading AI and data driven research process across Australia. 70%+ of the properties they purchase are off-market and they have consistently outperformed national average capital growth rates by over 49%. Whether you’re looking to build your property portfolio or secure your first investment. Check them out here.