Sydney homebuyers struggling to break into the market could soon be offered extra relief, as NSW records a near $4 billion budget surplus buoyed by stamp duties and asset sales.
The state's finances were $259.9 million better off than forecast in the 2016/17 budget, Treasurer Gladys Berejiklian said in releasing the half-yearly budget review on Tuesday.
But there are economic clouds on the horizon, with NSW already slugged hundreds of millions in GST revenues and its share of the consumption tax carve-up to fall even further in coming years.
NSW has gone from being the nation's weakest economy five years ago to leading the country on all key indicators.
The state's coffers have received massive injections from taxes fuelled by Sydney's booming property market, as well as the part-privatisation of the state's electricity assets.
Ms Berejiklian said the government was now focused on infrastructure spending, and signalled she was open to tackling housing affordability through stamp duty concessions.
"I am open minded, the government remains open minded, to further opportunities we have in that regard," she told reporters in Sydney on Tuesday.
However, shadow treasurer Ryan Park said homebuyers had "heard it all before" on stamp-duty tax breaks, and despite record numbers of new housing built, the crisis was spreading to middle-income earners.
"We have nurses, we have teachers, we have those working in hospitals unable to see any way out of this housing crisis and unable to put a permanent roof over their head for their family," he said.
Mr Park renewed calls for bipartisan reforms around land supply, taxation and incentives.
However, scrapping stamp duty in favour of collecting land tax appears to be off the table.
"That specific example brings its own challenges, and certainly we believe the system we have in place is the best one and the right one for this time," Ms Berejiklian said.
The NSW planning minister recently broke with his federal Liberal colleagues to attack negative gearing, arguing it favours rich investors over first homebuyers.
Ms Berejiklian refused to be drawn on the divisive tax break, insisting it was out of her hands.
NSW will remain in the black in coming years with surpluses averaging $1.8 billion a year over four years.
The state's net debt position is also in a good position, shrinking to nearly zero in the 2015/16 financial year - the first time on record for the state.
But NSW is bracing for a multi-billion dollar GST hit over the forward estimates as it subsidises other states.
"We are the victims of our own success," Ms Berejiklian said, adding NSW had always argued for a per capita return on GST with top-ups for smaller states.
"We can continue to argue that point, but we also have to live within the current circumstances, and we're making sure we do that."
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