The weakening in Victoria's home market is putting the state's budget at risk, according to a new report.

Dwindling returns from stamp duty due to the decline in the residential market threaten to cut hundreds of millions of dollars from state coffers, according to a report by The Sunday Herald Sun.

More drops in the future will pressure the Andrews government to make crucial decisions before May to prevent new taxes or increases in fees, according to senior Labor MPs.

Treasurer Tim Pallas has the final say whether taxpayers will see new charges.

"While he did not directly answer, he indicated the strength of the economy should get the government through the housing market correction. Property transactions slumped 35 per cent in the final quarter of 2018," said The Sunday Herald Sun.

The Real Estate Institute of Victoria data revealed that only 17,596 sales were recorded in the final three months of 2018 — down from the 26,506 sales from the same time in 2017 and 27,311 in 2016.

In November, the government announced that treasury had already cut $2.4 billion from its tax estimates over the next four years.

"Fewer sales should be of concern to the government as it translates to reduced levels of stamp duty and other property taxes, which are a major contributor to the budget bottom line," REIV Chief Executive Gil King said.