The collapse adds to a list of failures in the industry, as tighter financial regulation coincides with a downturn in property prices.

In the latest failure, Harvest Homes (Properties) and GLFB Pty Ltd, trading as Harvest Homes NSW, appointed a liquidator late last month.

The company was a boutique home builder specialising in house and land packages in the Hunter and built about 50 homes a year.

Total debts for GLFB is estimated to be more than $3.5 million, with about $3.35 million owed to 145 unsecured creditors.

The majority are subcontractors and suppliers unlikely to see a return.

Harvest Homes (Properties) is believed to owe more than $3 million to creditors including Newcastle City Council, Hunter Water, NAB and two other lenders. The company lists its assets as property worth up to $3.5 million.

The Harvest Homes' failure follows the collapse of Cardiff-based GR Homes late last year .

Liquidator Thomas Dawson, of DCL Advisory, said the chance of a return for unsecured creditors was "very low".

Mr Dawson said there were 10 "mum-and-dad homes" left incomplete due the the company collapse and these would be covered by home warranty insurance.

The directors of both GLFB and Harvest Homes (Properties) are Steve Taylor and Dean Turner, both of Merewether.

Mr Taylor said on Thursday that the collapse was due to "circumstances beyond our control".

"We're devastated and very sorry for the issues this has caused," he said. "We did everything we could for the place not to fold, but with the things that conspired against us we couldn't make it work."

Creditor Terry Stewart, of Stewart's Turf, described the situation as "bad for the whole region".

"You only have to look at the list of people who are owed money to see how bad this is for a lot of local people," he said.

"There is little hope we will ever see a cent."

Matt Urban, who's Thornton landscape business is owed more than $20,000, said typically it was the "tradies and suppliers left out in the cold again".

Last month a Queensland builder went into liquidation owing Mr Urban's company an additional $30,000.

"I'm not going to get any money out of any of them," he said.

"The way the system works is so unfair. The home owners are protected by insurance, and they should be, but there is no protection for us."

Master Builders NSW executive director Brian Seidler said there needed to be changes made to the Security of Payment Act, designed to protect subcontractors and ensure prompt payment for services.

He said the legislation should be extended to the relationship between residential builders and owners to ensure payment flowed to subcontractors and suppliers.

"When things get tight there is a correlation of people going into liquidation," he said.

"What we're seeing is some work in the industry is undervalued, meaning builders are doing work too cheaply to win jobs."