Australia’s property market has earned a major vote of confidence, with new research naming the country the second‑best destination in the world for holiday home ownership.
An extensive index from home loan experts Compare the Market analysed 50 global destinations on affordability, climate and lifestyle amenities, scoring Australia an impressive 7.46 out of 10 for its tourist appeal, ahead of more than 40 countries, news.com.au reported.
Cyprus narrowly edged into first place with a score of 8.25, but Australia comfortably outranked popular European hotspots including Malta (7.11), Italy (6.91) and Greece (6.76) in the top five.
Australia’s ranking was driven by its enviable climate and lifestyle. The Compare the Market report found Australia ranks third globally for average monthly rainfall (just 36.94mm) and seventh for average temperatures at a warm 22.8C. Coupled with a thriving culinary scene – with 405 restaurants per 100,000 people – the Land Down Under shapes up as a highly attractive location for both domestic and international holiday home buyers.
Top holiday regions highlighted include the Gold Coast, Sunshine Coast, Port Douglas, and celebrity favourite Byron Bay, along with rising stars such as Launceston in Tasmania, the Yarra Valley and Daylesford in Victoria, and Western Australia’s Margaret River.
“Buying a holiday home is about more than just finding a beautiful location; it’s about making a smart financial decision,” said Stephen Zeller (pictured), general manager of money at Compare the Market Australia.
“Affordability is a key factor, as is weather and lifestyle amenities. Italy, for example, offers accessible housing prices compared to other European nations, which can make financing more manageable. That’s where comparing home loan options becomes crucial.
“Whether you’re purchasing for personal use, rental income, or a mix of both, comparing home loans can give you a clearer picture of your borrowing power and help you make informed decisions.”
The global appeal comes amid a powerful wave of investor activity at home, with APRA data showing a record $72 billion in new investment loans in the September quarter and regulators preparing new debt‑to‑income caps for 2026.
Even as Australia climbs the global ranks for holiday home appeal, new draft tax rules could hit some owners in the hip pocket, news.com.au reported.
Under the draft guidance, homeowners in this category may no longer be able to claim deductions for interest, council rates or maintenance unless the property is mainly rented out to generate income, rather than being used as a private getaway.
The move forms part of the ATO’s push to ensure properties claiming tax breaks are true investment vehicles, not just “personal playgrounds”. More than two million investment properties are estimated to claim tax deductions each year, with the average deduction sitting at around $20,000 in previous years.
Heather Moore, head of accounting and tax at Knight, told Yahoo Finance the ATO’s stance is a clear warning for owners who blur the line between investment and lifestyle.
“They’re pinning it down to peak periods, because if that was a true income-generating investment property, then owners would be maximising the earning ability of that property,” Moore said.
“(This) would mean hiring it out for peak times, so school holidays, Christmas, Easter, potentially even if it’s in the centre of Melbourne around footy finals, that sort of thing, rather than having it available for personal use and for friends and family use instead.”
For would‑be buyers attracted by Australia’s strong global ranking – and existing owners counting on tax deductions – the message is clear: choose the right location, structure the finance carefully, and ensure the ATO will view the property as a genuine income‑producing asset, not just a holiday retreat.
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