The slowdown has seen apartment prices drop 7% in Sydney and 2% in Melbourne.
It also spurred a shadowy forecast by analysts that the country's largest real estate developers – Mirvac, Lendlease and Stockland – face a greater risk of falling settlements and an impact on their profits, because of their exposure to projects sold to buyers in the market. 2017 peak of the property cycle.
The developer behind the 130-unit Epping project is a little-known device called Gondon, with links to a Chinese developer.
Gondon sold 69 apartments in the project, marketed as a "new standard in contemporary life," before Newpoint receivers were called. They are considered to have been appointed by an offshore bank based in China.
A group of Epping lucky owners earned more than $ 26 million in the 2016 real estate market when Gondon began adding several suburban homes along Carlingford and Cliff Roads to set up a "super-lot" development site.
The group's only previous project in Australia was an apartment block called Macquarie in North Ryde.
Sales agents Colliers International and Newpoint declined to comment.
Epping's average unit prices fell 2.26% year-on-year to an average of $ 820,000, according to CoreLogic.
A one-bedroom apartment in Elysee was selling for $ 788,000 and two-bedroom units were at $ 1.08 million before the project fell.
Lending by Australian banks has fallen 22 percent from its peak as the top four tighten investor investment, raising standard variable interest rates and increasing scrutiny of borrower requests.
The country's biggest real estate developers face a rising risk of buyers failing to pay at the time of settlement because of falling apartment and land prices, analysts say.
"We see Mirvac as the most risky, followed by Lendlease and Stockland," said Grant McCasker and James Druce, UBS analysts.
Apartment sales represent a significant part of Mirvac's profits, in particular, over the next three financial years. By 2020, nearly a third of the group's earnings will come from settlements in Sydney and Melbourne.
The most risky projects are in Marrickville and the Olympic Park in Sydney, which "already seem to be out of money" because Sydney's apartment price index has dropped 5% since the launch, analysts said.
St Leonards could also become a problem if prices fell by more than 5% to 10%.
"We are less concerned about Lendlease's liquidation risk given the price increase since the 2015-16 launch dates," said McCasker and Druce.
Another major developer, Stockland, has minimal exposure to the apartment market, but is betting on substantial gains from land sales to new homes.
The number of buyers canceling land purchase contracts is currently low, but UBS warns that tightening credit, declining prices, incentives and smaller deposits will increase the number of struggling buyers.
There has been a documented increase in speculative land buyers attempting to offload their purchase contracts on Gumtree and other sites, which increases the risks.
"We expect the second half of the Stockland agreements to disappoint with the increase in cancellation fees and liquidation times to extend," UBS said.
Property experts believe there is more pain to come to the industry.
SQM Research real estate analyst Louis Christopher said that despite recent declines, the real estate market in Sydney and Melbourne is still overvalued.
"This crisis still has some legs to run yet," he said Tuesday.
"Sydney and Melbourne remain overvalued despite the price declines that have taken place, there is an election only a few months away where negative leverage is at stake, and banks are still being very draconian in lending to the market."
"We believe there will be more price declines," he said.
Editor of The Age and BusinessDay newspaper for Fairfax's theage.com.au, smh.com.au, watoday.com.au and brisbanetimes.com.au.
Carolyn Cummins is the commercial property editor of The Sydney Morning Herald.