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I see your point but considering the difference in price between:
http://www.barratthomes.co.uk/new-homes/cleveland/H249201-Meadow-Rise/
and
http://www.barratthomes.co.uk/new-homes/middlesex/H442601-Edgware-Green/It doesn't seem to me that the cost of materials and labour is really the main driver of final price.
The point @fidbod makes sounds like it fucks the banks over but perhaps 10x cheaper is too extreme to make a realistic comparison. I also don't know the penalties for defaulting and where the cost benefit of doing it overcomes and potential problems.
Dramatic_Hammer
If houses were 10x cheaper to buy then it would be uneconomical to build them. So all developers and house-building companies would go out of business overnight. Cue massive redundancies in the construction industry, a massive increase in unemployment, a reduction in GDP and tax income and a huge increase in social security payments. Cue knock-on effects on the rest of the economy, and you'd be looking at a recession of biblical proportions.