Developers fear this could lead to a surge in settlement defaults and send apartment values plummeting.

Danni Addison, CEO of the Urban Development Institute of Australia, told the Australian Financial Review there was great concern about the impact of numerous policy decisions on the property development industry and the economy.

"The industry has come together as one voice to tell the government about the real economic impact their decisions are having on the ground," Ms Addison said. She said the UDIA and the Property Council will seek meeting with the state government to voice these concerns.

One developer who attended the meeting told the AFR: "Banks without any communication have stopped lending almost straight away to foreign buyers.

Danni Addison: Policy decision could damage the economy

"You don't need to be Einstein to know what the ramifications are, given tens of thousands of people will settle on their apartment purchases over the coming months. We need liquidity back into the market.

"If you have a 100 apartments, and sell 30 of them to foreign buyers and 90 per cent of these don't settle, this will be disastrous for sentiment - construction is the number one economic activity in Victoria," he said.

The meeting was chaired by developer Clement Lee, whose Riverlee is undertaking a $250 million-plus waterfront residential and retail development at North Wharf on the Yarra and David Kobritz, managing director of private developer DealCorp.

Melbourne buyer's agents Secret Agent calculated that a typical CBD apartment default could leave a developer $100,000 out of pocket if they were forced to re-sell an apartment in the secondary market.

The full list of attendees. supplied

Listed broker Mortgage Choice warned this week that lenders were discreetly imposing tough new borrowing conditions that are reducing the amount property buyers qualify for by thousands of dollars.