While developers retain the deposit if a buyer walks away, they then have to resell the lot in a market where prices are falling and sales volumes have crashed amid the credit squeeze and housing market slowdown.

One industry source said he knew of a Melbourne home builder with a 40 per cent default rate. New homebuyers either buy a lot from a developer and then choose a suitable home to build on it or they purchase a house-and-land package from a home builder.

Speculators, desperate to flip their sites or lose their deposits, have turned to classifieds website Gumtree in droves. It currently shows almost 1000 Melbourne lots being offered for resale through contract nominations.

"There's a lot more activity on the secondary market – we refer to it as the Gumtree index," said Kelvin Ryan, CEO of home builder the Simonds Group.

"Any speculator sitting on a block is on Gumtree hoping to sell it, that activity has ramped up. A lot of them put a deposit on blocks with no hope of getting finance and they're panicking."

However, Oliver Hume managing director Michael Duster said his company was "not experiencing any defaults".

He put this down to taking out nomination clauses from its contracts and still requiring a 10 per cent deposit on all sales, rather just a $10,000 deposit allowed by many developers.

Mr Satterley said the main reason for the high defaults were speculators not being able to sell-on their contracts via nomination due to falling prices and rising numbers of listings or an inability to get finance.


"There's no finance available for overseas buyers and its very hard for local investors to get finance," he said.

Previously, Mr Satterley had told the story of his Melbourne Uber driver who had bandied together with his friends to raise $20,000 for a deposit on a housing lot with the plan to sell on the contract at a much higher price and pocket the profit.

Amid the steep housing market correction, sales of house-and-land packages in Melbourne's new housing estates have plunged from annual sales of 25,000 18 months ago to just 10,000 a year with prices easing, Mr Satterley said.

Mr Satterley said he expected land prices to fall a further 7.5 to 12.5 per cent while established house prices would fall a further 10-12.5 per cent.

"The best month for sales last year was February when there were 1845 lot sales in Melbourne. In December that figure was just 552," Mr Satterley said.

Mr Satterley said he was aware of a number of major home builders and developers who had laid off staff due to the downturn in sales and rising defaults.

Lot prices, which peaked in the second quarter of 2018, at a record of $355,000 – growth of 40 per cent annually – have also eased back with project marketer Red23 recording a median price of $348,000 in December.

Red23 head of research Andrew Perkins said sales volumes had fallen "significantly" and put the current annual sales rate at less than 15,000 lots compared with "north of 22,000".

Mr Perkins added that incentive had returned to the land market after a number of years.

"These have taken the usual forma – rebates, landscaping and referral. There are prevalent in every growth area municipality," he said.

Among those offering incentives is Satterley Property Group which is giving away a $15,000 "thank you" bonus for purchasers in its Victorian estates up until the end of February. Buyers need only put down a $10,000 deposit to secure their lot.