There is the test property WORKING_DIRECTORY.
But unlike most other properties, you cannot change the default.
The default is always the directory, where add_test() was called.
I would like to change the default to CMAKE_RUNTIME_OUTPUT_DIRECTORY.
Maybe this should even be the implicit default, if it is set?
AFAIK, test properties do not have any initialization from local variables today. CMAKE_CTEST_ seems like a suitable prefix for such things to me, but wider discussion would be warranted before doing that.
Not without a policy and it doesn’t seem like something warranting such a drastic change given how long the current default has existed and may disrupt existing codebases unnecessarily.