Cooling property market delivers $5 billion blow to Victorian budget
A reduced take from stamp duty and land taxes will shave an average of $1.3 billion from the state's tax revenue over the coming four years, according to a fiscal update delivered on Friday.
Victorian government budget forecasts have suffered a $5 billion hit due to a cooling property market, according to a fiscal update released just days before the state election. The decline in property market activity, attributed to higher interest rates and other factors, has led to reduced revenue from stamp duty and land taxes, shaving over $1 billion off budget projections over the next four years.
Despite this setback, the state is still on track to record operating surpluses, albeit with a significant reduction compared to the previous budget forecast. Net debt is projected to be slightly lower than initially expected, though interest expense payments continue to strain state finances. The cooling property market has also raised concerns about Victoria's economic outlook, with factors like federal migration changes and rising fuel and material costs posing additional risks.
Treasurer Colin Brooks acknowledged the impact of the downturn, attributing it to the broader country's situation driven by inflation, interest rates, and federal budget changes. The government's responsibility for the property market decline is under scrutiny, while Premier Ben Carroll has pledged to reconsider the recent land tax increases if Labor wins the upcoming election.
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