Global research ranks Australia as a top destination for holiday home investors – realestate.com.au

Australia’s property market has received a resounding show of confidence on the global stage, with new research showing the country is the second best in the world for holiday home ownership.

According to a comprehensive index by home lending experts Compare the Market, the Land Down Under outpaced more than 40 other countries, with an impressive score of 7.46 out of 10 for its tourist appeal.
The research meticulously analyzed 50 destinations worldwide based on crucial factors such as affordability, climate and lifestyle amenities, identifying the most attractive locations for purchasing a holiday home.

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While Cyprus narrowly pushed Australia into first place with a score of 8.25, Australia comfortably surpassed popular European hotspots such as Malta (7.11), Italy (6.91) and Greece (6.76) in the top five.

Australia’s stellar performance was largely due to its enviable climate and vibrant lifestyle offering.

The report highlighted Australia’s exceptional weather, which ranks third globally for average monthly rainfall (just 36.94mm) and a glorious seventh for average temperatures, at a balmy 22.8 degrees Celsius.

Combine these sun-drenched days with a thriving culinary scene – with 405 restaurants per 100,000 inhabitants – and it’s clear why Australia offers such an irresistible proposition to holiday home buyers.

Australia has many holiday homes and famous rental companies. Among them is singer Daniel Johns of the band Silverchair, who rents out his Merewether Beach home to holidaymakers.

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The house offers ocean views and colorful interiors. Source: Airbnb

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Stephen Zeller, General Manager Money at Compare the Market Australia, highlighted the strategic considerations involved in such an investment.

Australia’s top holiday hotspots include the Gold Coast, Sunshine Coast, Port Douglas and celebrity hotspot Byron Bay, along with rising stars such as Launceston in Tasmania, Yarra Valley and Daylesford in Victoria, and Margaret River in Western Australia.

Megan Gale has also embraced the holiday home market after investing in a property in Daylesford. Photo: David Caird

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“Buying a vacation home is about more than just finding a beautiful location; it’s about making a smart financial decision,” said Mr. Zeller.

“Affordability is a key factor, as are weather and lifestyle. For example, Italy offers accessible house prices compared to other European countries, which can make financing more manageable. That’s where comparing home loan options becomes crucial.

“Whether you are purchasing a home for personal use, rental income or a combination of both, comparing home loans can give you a clearer picture of your borrowing power and help you make informed decisions.”

New tax rules that could cost owners thousands

Australian holiday home owners are facing the possibility of losing tax deductions under new ATO rules targeting properties not available for rental during peak season.

Chartered Accountants ANZ (CA ANZ) has highlighted the potential changes to holiday home taxation following new draft guidance from the Australian Taxation Office (ATO).

From 1 July 2026, certain holiday properties may be treated as ‘leisure facilities’ by the ATO, meaning homeowners will not be able to claim deductions for interest, rates or maintenance unless the holiday property is primarily let to generate income.

The move comes as the tax authorities want to ensure that properties claimed for deductions are truly investment vehicles, and not just a personal playground.

The Australian Taxation Office has started using artificial intelligence to identify holiday home owners who are incorrectly claiming tax deductions, warning that properties that are not actually rented out during peak periods will lose their tax benefits.

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It’s estimated that more than two million investment properties claim tax benefits each year, with the average deduction hovering around $20,000 in previous years.

Heather Moore, head of accounting and tax at Knight, told Yahoo Finance that the ATO’s new guidelines send a clear message to holiday home owners who have blurred the lines between personal use and legitimate rental income.

“They limit it to peak periods because if that were a true income-producing investment property, then the owners would maximize the earning power of that property,” Moore said.

“(This) would mean renting it out during peak times, so school holidays, Christmas, Easter, possibly even if it’s in central Melbourne around football finals, things like that, rather than having it available for personal use and for use by friends and family.”