Key facts
- New South Wales' tax revenue from home sales fell 24% in August.
- The August tax revenue from home sales was the lowest monthly intake since the COVID-19 pandemic.
- Sale volumes for residential property transactions fell 18% in August.
- The state is bracing for a A$5.3 billion hit to stamp duty receipts over the next four years.
- The Reserve Bank of Australia has raised interest rates to 4.35%.
- National house prices have fallen nearly 4% from their peak.
New South Wales, Australia, experienced a significant drop in tax revenue from home sales in August, collecting A$631.1 million, a 24% decrease from the previous year. This marks the lowest monthly intake since the COVID-19 pandemic, with sale volumes also falling by 18%. The slump is attributed to higher borrowing costs and recent tax changes that have dampened buyer demand and property transactions.
While an unexpected surge in revenue from the non-residential sector, including data centers and renewable energy projects, helped salvage overall revenue in August, the state government anticipates a substantial A$5.3 billion reduction in stamp duty receipts over the next four years. Andrew Lilley, chief rates strategist at Barrenjoey, forecasts a 28% drop in stamp duty receipts this year, equating to approximately A$2 billion for state coffers.
The Australian housing market has seen national prices fall nearly 4% from their peak, with Sydney and Melbourne experiencing declines of over 7%. Property sales are down 15% year-on-year, according to Cotality. Economists predict a potential peak-to-trough fall of 10% nationwide, which would be the largest in three decades, with HSBC forecasting a 13% drop if interest rates increase further. The Reserve Bank of Australia has already raised rates to 4.35%, and markets imply an 84% probability of another hike at its upcoming policy meeting.