Western Australia's biggest home builder, BGC Housing Group, has paused new home sales to focus on clearing a backlog of almost 4000 builds.
A number of smaller local builders have gone into liquidation over the past two years as the sector battles to keep up with demand.
Modelling by the National Housing Finance and Investment Corporation this week identified a projected shortage of 106,000 dwellings across Australia by 2027 based on supply and demand calculations.
Perth accounts for almost one-quarter of those homes and its supply balance is identified as the worst of any capital city in the coming years.
With the state government seeking to bolster the construction workforce, next month's budget will fund $2000 one-off payments for apprentices and trainees in the industry who complete their training.
On average, about half of WA construction apprentices and trainees do not finish their studies.
The decision by BGC Housing to turn away new customers is expected to impact some sales and administration jobs.
Executive general manager Michael Bartier said redeployment opportunities would be offered where possible and the company would review the sales halt once labour availability improved.
"This decision, effective immediately, will allow us to focus all our resources entirely on existing customers, many of whom we know have experienced frustrating delays," Mr Bartier said in a statement.
BGC capped new home sales in July last year, attributing the decision to labour and supply issues, rising costs and material shortages.
Property Council of Australia chief executive Mike Zorbas said the projected shortfall of national dwellings presented a "grim warning" to policymakers.
"It reminds us that state, territory and local governments simply have to lift their run rates on housing supply across the at-market, key worker and social housing spectrum," he said.
"We also need to urgently move the housing needle by creating the right investment conditions for new build-to-rent housing, purpose-built student accommodation and retirement living communities.
"We need this for our existing population and to continue to attract the skilled migrants and students who support our education sector and bridge the huge gaps in our mining, construction, agricultural and retail workforces nationally."
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