The government-back mortgage indemnity scheme, NewBuy, has so far seen just 250 home purchases, according to data published by the Communities and Local Government today, but there are signs that sales levels will soon rise sharply.
The scheme is designed to make it easier for first time buyers to get on the property ladder by accessing mortgages with deposits as low as 5%.
"It is no great surprise that only 250 home buyers have completed the purchase of their home using the NewBuy scheme, as it is still in its infancy," said Chris Cobbold, head of Residential Practice at DTZ.
In fact, figures released by the Home Builders Federation (HBF) show that NewBuy has already received 1,500 reservations so far, just six months after its launch, with activity expected to pick up further as the autumn selling season gathers pace.
Cobbold added: "I expect the volume of New Buy sales to ramp up over the next couple of years, but then start to plateau. That could be at 5,000 sales a year, it could be at 10,000 a year. At these levels the intervention will be making a useful contribution to boosting demand for new homes - but someway short of the impression the government gave when it stated that this would help ‘up to 100,000 homebuyers'."
Speaking at RESI 2012 in Newport earlier this month, Redrow chairman Steve Morgan praised the government for introducing the New Buy scheme.
"NewBuy is exactly the kind of mortgage indemnity guarantee (MIG) that I was calling for at RESI 2010 and is a great concept."
Morgan wants to see a similar MIG scheme introduced for the second hand market, especially for first time buyers, in a bid to boost demand.
He added: "When a first time buyer purchases a second hand home, it then frees up someone in the chain to buy a new home. New home building is historically between 10% to 15% of the overall housing market. By definition, the closer we can get to a more normal 1.5m housing transactions per annum you will automatically see a increase in new home building to 150-200,000 new homes."