Scott Morrison is being urged to extend the HomeBuilder program after new research found the coronavirus pandemic could savagely cut housing demand over the next three years.
The Property Council also wants the government to introduce a new migration plan.
Population growth could fall by 214,000 between 2019 and 2021, a decline only surpassed by World War I and the unwinding of the 1971 baby boom.
This is the result of international border closures that have effectively shut down overseas migration, which accounts for roughly 60 per cent of population growth.
As a consequence, housing demand could be cut by between 129,000 and 232,000 dwellings.
The National Housing Finance and Investment Corporation has also highlighted the potential impact of international students from countries like India and Brazil no longer being able to travel.
"This research highlights the strong relationship between population growth, increasingly through net overseas migration, and underlying dwelling demand, with the outlook for population growth due to COVID-19 highly uncertain," the corporation's chief executive Nathan Dal Bon said.
Evidence from the global financial crisis suggests economic factors such as the unemployment rate and the exchange rate are also important for international students in selecting Australia.
"It took around four years after the global financial crisis for student numbers to recover to pre-GFC levels," the report says.
The past two recessions also show rising unemployment tends to lead to a decline in natural population growth.
Property Council chief executive Ken Morrison said the report painted a scenario that cannot be allowed to happen.
"If we do, it will mean tend of thousands more Australian losing their jobs," Mr Morrison said.
"A road map for restarting our migration program should be a top priority for national cabinet."
He also wants to see the government extend its HomeBuilder stimulus program for new housing construction for a further six months to July 2021.
Australian Associated Press
