Victoria's booming property market and job growth will see the budget surplus for this financial year climb $560 million higher than expected.

The state's mid-year 2017/18 budget update was released on Friday showing the upcoming June surplus will now be $1.7 billion.

"Population growth in Victoria is above the national average and has underpinned resilience in the property market, boosted Victoria's share of GST revenue and driven our strong economic growth," the report said.

Land and payroll tax revenue is forecast to grow, gambling tax growth is predicted to be weaker, while motor vehicle taxes are expected to decline due to the introduction of new quarterly and six-monthly payment options.

"Victoria is the state of momentum," Treasurer Tim Pallas said.

The 2018/19 surplus has been revised up by $142 million to $1.975 billion, while the 2019/20 figure is down $419 million to $2.4 billion, and the 2020/21 surplus is down $87 million to $2.7 billion.

The report says changes in official interest rates could present a risk to state revenue, with Australia's high level of household debt a potential handbrake on the booming property market.