Sure the original purchasers got their deposits back. But the developer got to use the deposit money as an interest free loan. And use the sale contracts to help get finance for the development. While the purchasers missed out on the capital gains. And would then have to pay extra to then obtain equivalent property.
Also consider insurance implications of taking possession of a property that you haven't yet purchased. If maintenance or repairs are needed, who pays? What if the house burns down or a natural disaster destroys it? Do you have to pay any rent? And / or would you and the vendor be subject to the residential tenancies act?