Are you a first home-buyer still holding out hope that astronomical house prices might fall in Sydney?

Key points: Price growth above expectations and not expected to improve this year, document says

Price growth above expectations and not expected to improve this year, document says Demand driven up by undersupply, investor activity and population growth

Demand driven up by undersupply, investor activity and population growth Investors underpinning construction industry and creating jobs

Confidential NSW Treasury reports, obtained by the ABC through a Government Information (Public Access) request, say that despite years of rising prices, the local market may be headed for a "soft landing", and not the crash some frustrated home hunters might be secretly hoping for.

A 2016-17 half-yearly revenue forecast paints a picture of a once-in-a-generation boom saying that while Sydney's raging market cooled at the end of 2016, price growth remains "above expectations".

The reports also spell out something obvious to most millennials — record low interest rates and low wage growth are not helping young buyers get into home ownership.

The authors note Sydney's high prices are remaining "stronger than expected" despite weaker turnover of properties in the last quarter of 2016, and falling demand in other parts of the country.

Treasury calculations show that in 2016 average mortgage payments in Sydney were almost $51,000 a year — double that of Brisbane on $29,000.

What goes up must come down, right?

Fast-tracked developments have failed to fill a shortage of about 100,000 dwellings being built per year. ( AAP: Joel Carrett )

The reports suggest we live in an unusual economic cycle and the current period of high prices is "significantly longer" than previous booms.

Demand is driven up by the trifecta of strong population growth, high investor activity and construction undersupply.

Despite a planning push to fast-track development, there is still a housing shortage with supply hovering at around 100,000 dwellings per year.

The report contradicts Premier Gladys Berejiklian, who said her policy of increasing supply would alone help affordability and slow Sydney's runaway prices.

Lending crackdowns failing to deter foreign investors

So have tougher new lending rules stopped cashed-up investors out-bidding Sydney's first-home buyers?

A February 2017 Treasury Forecast said while APRA's attempt to clamp-down on investment lending was initially effective — lowering investor borrowing by more than 10 per cent in mid-2015 — the impact did not last long.

The authors noted that "affordability is not expected to improve" this year, pointing to the investors dominating 2016 residential finance approvals (56 per cent) at the expense of owner occupiers (44 per cent).

Recent Commonwealth Treasury figures revealed foreigners snapped up $72 billion in Aussie real estate last financial year, up from $60 billion in 2014-2015.

State budget on Tuesday won't magically solve affordability

This might be a reason why the State Government has recently raised surcharges and taxes on overseas investors.

It may also have local buyers hoping for further reforms, such as reducing or even eliminating transfer duties, in Tuesday's state budget.

But the documents suggest further reforms wold be difficult.

The Treasury analysis makes clear that high numbers of investors are underpinning Sydney's construction industry, and in turn creating jobs in the NSW economy.

The revenue flows from cashed-up investors paying transfer duties are also helping fill the state's coffers.

The documents predict high levels of transfer duty receipts in 2017 as population growth, lack of supply and investor demand continue.

They also forecast $8.8 billion in stamp duty, boosted by revenues from large transactions like the lease of Ausgrid.

Transfer duty is far and away the biggest contributor to the NSW tax-take and its reform is complex and difficult.

Instability concerns

While the documents suggest revenue growth is healthy, there are niggling warnings about some dark clouds on the horizon.

The authors warn that if house prices start to fall, yield-chasing investors are likely to hot-foot it out of the market.

Higher interest rates or increasing unemployment figures are cited as triggers of instability, prompting a collapse in residential property investment — and much state revenue with it.