Summary Seismic and tsunami hazard modelling and preparedness are challenged by uncertainties in the earthquake source process. Important parameters such as the recurrence interval of earthquakes of a given magnitude at a particular location, the probability of multi-fault rupture, earthquake clustering, rupture directivity and slip distribution are often poorly constrained. Physics-based earthquake simulators, such as RSQSim, offer a means of probing uncertainties in these parameters by generating long-term catalogues of earthquake ruptures on a system of known faults. The fault initial stress state in these simulations is typically prescribed as a single uniform value, which can promote characteristic earthquake behaviours and reduce variability in modelled events. Here, we test the role of spatial heterogeneity in the distribution of the initial stresses and frictional properties on earthquake cycle simulations. We focus on the Hikurangi-Kermadec subduction zone, which may produce Mw > 9.0 earthquakes and likely poses a major hazard and risk to Aotearoa New Zealand. We explore RSQSim simulations of Hikurangi-Kermadec subduction earthquake cycles in which we vary the rate and state coefficients (a and b). The results are compared with the magnitude-frequency distribution (MFD) of the instrumental earthquake catalogue and with empirical slip scaling laws from global earthquakes. Our results suggest stress heterogeneity produces more realistic and less characteristic synthetic catalogues, making them particularly well suited for hazard and risk assessment. We further find that the initial stress effects are dominated by the initial effective normal stresses, since the normal stresses evolve more slowly than the shear stresses. A heterogeneous stress model with a constant pore-fluid pressure ratio and a constant state coefficient (b) of 0.003 produces the best fit to MFDs and empirical scaling laws, while the model with variable frictional properties produces the best fit to earthquake depth distribution and empirical scaling laws. This model is our preferred initial stress state and frictional property settings for earthquake modelling of the Hikurangi-Kermadec subduction interface. Introducing heterogeneity of other parameters within RSQSim (e.g. friction coefficient, reference slip rate, characteristic distance, initial state variable, etc) could further improve the applicability of the synthetic earthquake catalogues to seismic hazard problems and form the focus of future research.