Well, I was going to say option 1 based on location, location, location and presumably it will appreciate more than option 2.

BUT, if you think that reselling option 2 won't be a problem and you'll be able to pay off more in the meantime, then yes that's a good option too.

It really depends on how much you think each property will be worth in five years time. Have a look at prices in each burb from five years ago - that should help you make a decision.