Property crash to wipe $8b from NSW Budget

Advertisement

By Leith van Onselen

For five years, the NSW Budget reaped the windfall of an epic stamp duty boom, which saw receipts more than double from around $3.8 billion in 2011-12 to a peak of $9.0 billion in 2016-17. In 2017-18, stamp duty receipts retraced marginally, but was projected in the State Budget to remains at similar elevated levels all the way to 2021-22:

This surge in stamp duty also drove the share of New South Wales tax revenue from property up from around a third to nearly 45% between 2011-12 and 2016-17:

Advertisement

However, the epic property bust rolling-out across Sydney, which has seen property prices and transactions dive 10.3% and 31% respectively from peak (see below chart), has driven an $8 billion hole in the NSW State Budget. From The SMH:

The state’s half yearly budget review on Tuesday will… show the government has written down expected stamp duty revenue by $2.5 billion over the four years to 2021-22 due to the softening housing market and tightening lending conditions. That follows a $5.5 billion reduction over four years announced in the state budget, bringing the total write down since June to around $8 billion.

Advertisement

Bye bye big infrastructure spending and public spending. Hello austerity.

[email protected]

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.