When prices were high many developer mortgages/loans were for 70 or 80% of the valuation. This mortgage could then be subbrogated to a buyer (developers mortgage) if they wanted it and were happy with the terms. Often the banks turned blind eyes with respect to criteria, as we know.
Now that valuations have fallen, any developer still with this level of leverage has no option but to keep his price high otherwise he cannot discharge the mortgage or have the loan subbrogated.
Many more will go under as it is their easiest and best option.
I heard the other day that there were very good tax advantages if profits were rolled onto other developments, and surely this would have led to many developers doing this and building more!
Some buyers are successfully re-negotiating the price down and under law if the mortgage cannot be obtined, the buyer is supposed to get his deposit back!
Many buyers are being refused credit now and banks are taking forever to lend. I have one at the moment, sale agreed at the end of january – valuation finally being done tomorrow, after several weeks of apparent bank approval!