The property sales slump in Sydney will likely cost the government $600 million in stamp duty revenue this financial year, an amount that would almost halve the surplus, the Royal Bank of Canada predicted on Monday.

"I don't think it's a particularly big call," said Robert Thomson, an economist at RBC Capital Markets. "For them to get back on the budget track, that would be heroic."

The Coalition has cited fiscal discipline combined with heavy infrastructure investment as one of the main reasons it deserves to be re-elected on March 23. Betting markets say the contest is too close to call.

The deterioration in stamp duty illustrates how a sharp drop in Sydney property sales poses a threat to the state's budget surpluses, which the government in December forecast would be $1.4 billion this year and continue for the foreseeable future.

NSW Treasurer Dominic Perrottet ... Falling stamp duty threatens the size of the state budget surplus. Dominic Lorrimer

The Labor opposition has said it wants to keep the budget in surplus but is concerned about the impact of the property market.

"Certainly we would love to keep them and and that's what is our intention to do," said Labor's treasury spokesman, Ryan Park. "But we need to see what the situation is. I am not really confident about what their figures are projecting."

​The budget currently forecasts a $726 million fall this financial year in stamp duty from the sale of property. Stamp duty revenue covers almost 10 per cent of the cost of government spending.


Mr Thomson said more recent data on property sales indicated the government's forecast was over-optimistic and a "further set of downgrades to stamp duty forecasts across the rest of the forward horizon" is likely.

Treasurer Dominic Perrottet didn't challenge the economist's analysis, but said the government's budget discipline allowed it to absorb revenue shortfalls.

"There is no doubt the housing market is cooling with related implications for stamp duty revenue which have already been reflected in our budgets," he said.

Despite the property problems, ratings agency Standard & Poor's said it expected NSW to continue to deliver budget surpluses and keep its AAA credit rating.

"NSW's stable outlook reflects our expectation that its excellent financial management will ensure that the state continues to deliver on a large pipeline of capital spending, broadly within budget, while maintaining after-capital deficits and debt at manageable levels," S & P said in a report.

Mr Perrottet said the comments were a powerful endorsement of the government's budget management.

The state government has gone into caretaker mode, which prohibits ministers from directing public servants to make major decisions. The government doesn't have any influence over the budget update.

"The pre-election budget update allows all political parties, as well as the electorate, to have visibility of changes to the state's economic and fiscal outlook since the half-yearly review which was handed down in December," the Treasury secretary wrote to Premier Gladys Berejiklian and other political leaders on Monday.