As many as 43,000 new homes will not be built in the coming year because of the coronavirus downturn, according to modelling from an industry body.
Master Builders Australia made the grim forecast while calling for government stimulus to come faster.
"The scope and depth of the potential damage to our industry and the economy is devastating," said Master Builders Australia chief Denita Wawn.
"We previously forecast that there would be around 159,000 new housing commencements in 2020/21. We now expect there to be only around 116,000 – a drop of 27 per cent."
The amount of new homes required in Australia each year to house population growth is 200,000.
So the pre-coronavirus forecast was already 41,000 short – and now that deficit will blow out to 84,000 homes.
"[The shortfall] means that the impact on housing needs of our community will be severe," said Wawn.
"What this forecast shows is that stimulus measures cannot wait. Our industry, the economy and the community cannot afford to wait months."
There are almost 400,000 building firms in the country, with more than 90 per cent working on residential construction, according to Master Builders Australia.
Of those, the vast majority (388,000) are small- to medium-sized businesses that are less able to withstand short-term financial pressures.
"If governments do not act to support us now then the battle against the COVID-19 economic emergency could be lost just as the battle against the health emergency is starting to be won," Wawn said.
"We want to protect the viability of hundreds of thousands of small businesses and the jobs of a million Australians."
Conversely, the suppression in new building activity could mean the value of existing housing stock could shoot up once the pandemic fades.
Several experts told Yahoo Finance last month that they expect house prices to rise once social restrictions are loosened.
"I expect a short-term hit (which will vary from location to location) and then a strong rebound," said hotspotting.com.au director Terry Ryder.
Already Corelogic figures show the property market held steady with a 0.3 per cent gain during the month of April, in the face of some experts predicting a 40 per cent fall during the coronavirus crisis.