Part-exchanging has both advantages and disadvantages as you have discovered.
The £30,000 below valuation offered by your builder does seem a bit excessive. However, this is not a good market and as you say the builder is only selling around 7 new homes on this development a year.
Whether a lower offer is accepted will depend on the house builder. A large national builder will take an offer if it is near their
End of Year Figures. A smaller builder may be compelled by their bank to accept a lower price as they will need cash flow to pay down their debt.
The price you are paying £594,500, is in the high Stamp Duty 4% rate. You have negotiated this down to 2.3% from 4%, which is good, especially as it is just inside the 4% £500,000 band.
Stamp Duty Calculator If you have
Exchanged Contracts your 10% deposit is non-refundable. However, I presume you mean your reservation fee. Again they have agreed to refund this so you can walk away cost free if you choose.
Now the real consideration is that you don't like the house, it has various problems and is overlooked with no privacy. Considering your budget, you must be able to find a better home. In addition you will need to consider that you have the potential of
living on a building site for another four years at least.
Finally, you need to consider that you have doubts about this home so any future buyers may have the same doubts. Even given the current market, these houses have been slow to sell so you could also have difficulty selling in the future.