NSW's plan to replace stamp duty with land tax could depress housing-market activity in the run-up to implementation of a new regime as people planning to buy could hold off doing so until given the chance to avoid the up-front stamp duty hit, said economist Shane Oliver.

But while plans to give buyers the choice of paying stamp duty upfront or take on a higher land tax every year could slow sales in the short term, it would also likely boost sales once the policy kicked in and people were able to save the tens of thousands of dollars currently paid the state government, Dr Oliver said.