State braces for big stamp duty revenue hit as home sales fall.

A LEADING conveyancer has warned of a big revenue hit to the NSW state budget as a sagging property market impacts stamp duty collection.

Your Move Conveyancing founder David Winning said the firm’s analysis of state stamp duty receipts showed they were likely to plummet around $3.1 billion in FY27, compared to the prior financial year.

He said the result was based on a forecast decline through the rest of FY27 after falls of around 20 per cent in August and September.

“The state government did revise down their stamp duty forecast in June, but definitely not anywhere near what it's probably going to forecast to be, or what it's going to end up being,” Sydney-based Winning said.

The falls so far, this financial year were about $200 per month but would deepen through December quarter due to a quiet spring selling season, he said.

Across these months, the hit to the budget bottom line would be “significantly more than that $200 million amount”, he said.

The warning comes amid reports that strategists have cast doubts about state projections of stamp duty revenue since the federal budget made controversial changes to tax laws, including negative gearing.

In the wake of the budget, NSW cut $2.3 billion from its predictions for stamp duty for FY27, forecasting an $8 billion total knock over forward estimates.

The forecast hit has sparked speculation that NSW’s credit rating could face downgrading.

The office of Treasurer Daniel Mookhey did not immediately respond to a request for comment.

According to Winning, the shortfall in stamp duty collections in NSW could also mean essential services being put at risk.

 “The state government exists really for essential services,” he said.

“The mind boggles around what you would have to be looking at cutting first. You know, there's no easy answer, I don't think.”

Winning said the decline in collections reflected the reality on the ground - fewer property transactions, especially as investors stayed on the sidelines.

“There is a bit more of an uptick in enquiries and deals coming together, but nowhere near around, you know, what we were looking at this time of year,” he said.

He urged the federal government to rethink its tax changes.

“Hopefully with that in mind, there'll be more certainty for investors to actually be able to get back out into the market and, get that side of the missing piece of the puzzle together.”