The proposed stamp duty concession, due to be announced at today’s mini-budget, which would give people buying new properties worth up to $500,000 up to $42,000 of assistance, is “not a panacea to fix the woes of the industry” Harley Dale, chief economist for the Housing Industry Association (HIA) told Architecture & Design.

“Stamp duty is one of many problems that housing in NSW has […] you’ve also got land release problems, levies and taxes charged on housing in NSW are considerably higher than any other state in the country.”

The “premier state” needs a leg-up at the mini-budget if it’s to keep its title. But, even so, recession may be hard to avoid, Dale said.

Lagging behind in employment, home building, consumer spending and investment, NSW is at risk of dragging down the national economy.

“We will find evidence within the next few months to say that NSW is effectively in recession,” said Dale. “Australia as a whole should escape it but NSW won’t.”

The state’s budget deficit has reached $1 billion and housing approvals in NSW are at their lowest since the post-WW2 era.

The “strong medicine” expected to be administered at the mini-budget today also includes an extra $3,000 for first home buyer grants for new homes, which will see contributions hit $24,000 when only a few months ago they were $7,000.

The new home building sector in NSW is very weak so any policy that stimulates new home building is very important, said Dale, not only for the industry itself but for the wider economy. NSW has been the weakest housing market in Australia for about five years. It was “struck while it was already down”, Dale said, and the leading indicators continue to look weaker than any other jurisdiction in Australia. However this gloomy assessment should improve as we move into 2009, he said, and we should see some evidence of things stabilizing.

Only time will tell if the strong medicine will be enough. “At a time when Australia as a whole needs to be looking at ways to stimulate the economy through fiscal policy, it’s not very good that NSW has a big hole in its finances and it’s looking to cut back on spending. It’s an unfortunately—timed set of circumstances.”