The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Interested in a Corporate TUD+ Membership? Access premium content, site tours, event discounts and networking opportunities
Interested in a Corporate Membership? Access exclusive member benefits today
Enquire NowEnquire
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Partner Lab
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
10
print
Print
ResidentialAna NarvaezTue 06 Nov 18

Property Market Slump Cuts $2.4bn Hole in Victorian Budget

974b2bcb-956a-4d9a-971c-880fb808442c

The Victorian government budget has taken a $2.4 billion hit in the lead up to the election, with property market uncertainty affecting the Andrews government bottom line.

The Victorian economy continues to outperform the rest of the nation, as stronger than expected consumer spending and business investment offset declines land transfer duty revenue.

The figures were published in a pre-election budget update released by the Department of Treasury and Finance on Monday.

Stamp duty on homes accounts for 30 per cent of Victoria’s revenue.

Treasury warned that moderation in the residential property market “could prove deeper” than currently factored into the forecast.

“Particularly if prompted by tighter access to credit, rising borrowing costs or an economic downturn.

“A weaker housing market could lead to softer household sentiment, lower consumption and dwelling investment and slower growth in employment, wages and real GSP.”

--– 2018 Victorian Pre-Election Budget Update.

Related: NSW Announces Biggest Stamp Duty Reform in 30 Years

Property-related taxed ‘highly volatile’

Despite cutting a $2.4 billion hole in government coffers, treasury revealed that land tax revenue has been revised up by $909 million over the next four years.

Treasurer Tim Pallas said on Monday that the government has taken a “conservative” approach to softening in the property market.

“The worst thing any government can do when there is uncertainty is to pull the market down or wind back investment,” he said.

Treasury said that the property-based tax revenue sources are “subject to unique risks and have historically been volatile”.

“If property market sentiment were to weaken faster than anticipated or is more prolonged, or mortgage interest rates rose more quickly than currently expected, revenue from property-based taxes may be weaker than forecast.”

Victoria's Housing Industry Association executive director Fiona Nield agrees.

“Stamp duty is notoriously cyclical, and the state’s fiscal position is heavily exposed to any downturn in stamp duty receipts,” Nield said.

“While the decline in overall stamp duty receipts will not reduce the cost impost on individual buyers, it will certainly impact on the Victorian government spending and activity.”

ResidentialAustraliaFinancePolicyReal EstateSector
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Brains, Guts and Determination: How Salvo Property Shapes Melbourne’s Skyline

Marisa Wikramanayake
5 Min
Fraser and Partners founder Callum Fraser
Exclusive

Saving Our CBDs: Architect’s Blueprint Paves Way for Office-to-Resi that Works

Leon Della Bosca
8 Min
Exclusive

Watchdog’s Court Loss Throws Spotlight on Union Balancing Act

Clare Burnett
6 Min
Time and Place's The Queensbridge Building at 90 Queens Bridge Street in Melbourne's Southbank.
Exclusive

Innovation Keeps Time & Place’s Southbank Skyscraper Rising

Marisa Wikramanayake
6 Min
Breathe Architecture founder Jeremy McLeod in front of his Featherweight Home design
Exclusive

Nightingale Founder’s Bid for Affordable Architectural Kit Homes

Leon Della Bosca
7 Min
View All >
Novus on Victoria Chatswood
Build-to-Rent

Novus Plots Second BtR Tower for Chatswood

Renee McKeown
Westmead Gene Technologies Building EDM
Life Sciences

Plans for $272m Parramatta Biomedical Facility Go Public

Clare Burnett
West End Stockwell Vulture Street DA hero
Development

Stockwell Files Tower Plans in West End Stomping Ground

Phil Bartsch
The 16-storey mixed-use proposal comprises 132 apartments and 602sq m of retail/commercial tenancies...
LATEST
Novus on Victoria Chatswood
Build-to-Rent

Novus Plots Second BtR Tower for Chatswood

Renee McKeown
2 Min
Westmead Gene Technologies Building EDM
Life Sciences

Plans for $272m Parramatta Biomedical Facility Go Public

Clare Burnett
3 Min
West End Stockwell Vulture Street DA hero
Development

Stockwell Files Tower Plans in West End Stomping Ground

Phil Bartsch
3 Min
Exclusive

Brains, Guts and Determination: How Salvo Property Shapes Melbourne’s Skyline

Marisa Wikramanayake
5 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/softening-property-market-a-threat-to-victorian-state-budget