Why saving falls behind
Your deposit target isn't fixed. It's a percentage of a price that keeps moving. If the home you want costs $1,250,000 and prices in that area grow 5% a year, a 20% deposit plus buying costs grows by about $16,000 in the first year alone. Saving $2,500 a month puts away $30,000. You're ahead, but only just, and the gap widens as prices compound.
That's the problem in most capital cities: home prices grow on a large base, while savings grow on a small one.
How investing first works
Instead of holding your savings in cash, you use them as the deposit on an investment property you can afford now, often in a different city or region. The property grows on its whole value, not just your deposit. After some years you either sell it and use the proceeds as your home deposit, or keep it and borrow against its equity.
Two things make or break it: how much the investment grows, and what it costs you to hold in the meantime.
When it works
- You have a decent starting sum. Usually $100,000 or more in savings or equity, so the investment is large enough for its growth to matter.
- You can carry the holding cost. A well-located house typically costs something each week to hold after rent at today's interest rates. Your budget needs room for that and a buffer.
- You can hold for long enough. Buying and selling costs take years of growth to recover. Most plans need five to ten years.
- The purchase is right. A suburb with real demand, a good pocket within it, and the right house at the right price.
When it doesn't
- Your savings are small. A small investment grows by a small amount, while the holding costs are real.
- You need the money within a few years. Selling early often loses money once costs are counted.
- Your job or income is uncertain. Two loans need steady income.
- You'd buy the wrong thing. New estates, off-the-plan units and "high-yield" towns with one employer have cost many first-time investors years.
In these cases, saving is often the better path. A good adviser should be willing to say so.
The 2026 tax changes
New rules passed in 2026 change the maths for established property bought after 7:30pm AEST on 12 May 2026. From 1 July 2027, rental losses on those properties can only be offset against residential property income, not your salary, and capital gains move from the 50% discount to an inflation-indexed cost base with a 30% minimum tax rate. In short: holding costs now come fully out of your pocket, and the tax on a sale can be higher. Read the full guide.
The numbers to check
| Check | Why it matters |
|---|---|
| Your borrowing capacity | Sets the price range for the investment, and whether you could later carry two loans. Ask a broker. |
| Weekly cost to hold, after rent | Must fit your budget with room to spare, before tax, because losses no longer reduce tax on your salary. |
| Growth in low, base and high scenarios | If the plan only works in the high case, it's not a plan. |
| Selling costs and capital gains tax | What you'd actually have for the deposit if you sell. |
| The year saving alone gets you there | The benchmark. Investing has to beat it by enough to justify the risk. |
The Escape Plan runs all of these for you in about two minutes.
What to do next
- Run your numbers in the Escape Plan.
- Speak to a mortgage broker about your borrowing.
- Ask your accountant how the 2026 tax rules apply to you.
- If investing first still looks right, book a free 15-minute call and we'll check the plan with you.
General information only. Nothing on this site takes into account your objectives, financial situation or needs, and it is not financial, credit, tax or legal advice. Past performance is not a reliable guide to future performance.