Residents of Christchurch's historic Cranmer Courts have conceded defeat and are handing their homes to the wrecker's ball.
The heritage-listed building was red-stickered after the February 2011 earthquake.
Demolition was halted last month when the 31 residents voted to sell the buildings to an Australian buyer, who had committed to restoring the quake damaged property.
But due to regulations and insurance complications, the buyer has cancelled the purchase agreement.
David Chambers, who lived in Cranmer Courts says the news has been a terrible blow.
"They had hoped, like everybody else in Christchurch I think, that there would be an 11th hour saviour for this wonderful old building, but the simple fact is that it proved to be uneconomic for the developer."
Chairman of heritage advocacy group Iconic, Professor Ian Lochhead, says no other developed nation in the world would allow a building of this significance to be destroyed.
"In many other countries, a building like this would simply be cordoned off until it was possible to actually carry out the restoration work."
He says the Canterbury Earthquake Recovery Authority's regulations on building safety may be too difficult to work with.