Australia continues to rank highly on the global stage as a destination for holiday home ownership, driven by its climate, lifestyle, and natural appeal. 

A new international study has placed Australia among the world’s top locations for holiday home investors, second only to Cyprus.

The research, conducted by Compare the Market, analysed 50 global destinations using factors such as affordability, climate, and lifestyle amenities. Australia outperformed a number of popular European markets, including Malta and Italy, highlighting its ongoing appeal to both local and international buyers.

Lifestyle played a significant role in the ranking. Australia’s coastline, outdoor living culture, and year-round temperate climate continue to attract buyers seeking both personal enjoyment and potential rental income. However, experts caution that holiday home purchases should be approached with a clear understanding of the financial implications.

Compare the Market spokesperson Stephen Zeller warns that buying a holiday home is about more than finding a picturesque location. From an investment perspective, owners need to ensure the property is genuinely income-producing if they intend to claim tax deductions.

From July 1, new Australian Tax Office rules may see some holiday homes classified as leisure facilities rather than rental assets. This means owners who do not make their properties available for rent during peak periods could lose access to deductions for expenses such as interest, maintenance, and management costs.

The ATO is also using artificial intelligence to identify properties incorrectly claiming deductions. Homes that are rarely rented, or unavailable during high-demand periods, are more likely to attract scrutiny. For investors, this adds another layer of complexity to holiday home ownership.

As a result, many buyers are reassessing whether lifestyle properties truly align with their financial goals. While holiday homes can offer enjoyment and occasional income, they require careful planning to ensure compliance and long-term viability.