Home values dropped across the country in 2018. Picture: Penny Stephens.Earlier this month, CoreLogic data revealed national home values dropped 4.8 per cent in 2018, marking the weakest housing market since 2008.Brisbane bucked the trend, with values rising 1.2 per cent for the year. Moody’s says state governments are feeling pressure from the housing correction. Image: AAP/Troy Snook.The report singles out Queensland as being vulnerable to rising health and education costs because of its recent “rapid population growth”.More from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours agoIt forecasts an increase in capital spending in the state as a result, which would erode cash reserves and prompt the state government to issue additional debt.“Debt levels remain elevated, and we expect debt will continue to rise more rapidly than revenue as most states embark on record capital spending programs,” Moody’s senior credit officer John Manning said. Moody’s says GST reform has added revenue to Queensland, but it will not enough to offset the fall in stamp duty. Image: AAP/Darren England.In its most recent budget update, the Queensland government also marked down stamp duties by $240 million.But NSW and Victoria are expected to be hit the hardest.“Despite already projecting lower property-related revenue in their fiscal year 2019 budgets, the larger states of NSW and Victoria now forecast further declines in transfer duty and land tax revenue as a result of weakening residential property market prices and falling sales volumes,” Mr Manning said in the report.“Concurrently, Queensland projects a marginal decrease in average revenue growth over the forecast period, reflecting lower income from GST and dividends, more than offsetting increased royalties in FY2019, largely on higher coal prices.” Moody’s says state governments are feeling pressure from the housing correction.THE property downturn led by the country’s two biggest housing markets is partly eroding Queensland’s revenue gains from reforms to GST funding, a new report warns.While the sunshine state is weathering the correction better than most states, Moody’s Investor Services says government debt levels remain high and could outpace revenue growth on capital spending programs.And while the recent GST reform has given Queensland an extra $518 million over the next eight years, the rating agency says it may not enough to offset the fall in stamp duty.