The government's flagship policy to help would-be home buyers is having the least impact in London and the South East across the whole country, according to a committee of MPs.
The Public Accounts Committee found that the 'Help to Buy' scheme has gained less traction in London and the surrounding region than the rest of the country, despite those areas having the greatest housing need.
It claimed that the policy has yet to prove that it will provide value for money in the long term, although it did note that the scheme had helped 13,000 home-buyers within nine months after launching last year.
According to the latest government figures the number of Help to Buy applications in London and the South East has fallen from a quarter of all applications to just two in ten.
The average house prices in the capital are now over £400,000, which means over £20,000 is necessary just to raise the 5% deposit needed to take advantage of the government scheme.
In Chancellor George Osborne's budget speech this week he announced the Help to Buy scheme would be extended until at least 2020, with an extra £6 billion of government money being poured into funding it.
Experts are warning that stronger curbs must be considered for the housing market amid fears that London is starting to show "bubble-like conditions".
New research by the EY Item club shows that by 2018, the average house price in London is expected to reach nearly £600,000.
That figure is some 3.5 times the average price in Northern Ireland and more than 3.3 times the average in the North East.
The report said that while the rest of the UK is returning to normality, London is showing signs of "bubble-like conditions" and policy makers should be prepared to step in.
But Andrew Goodwin, senior economic advisor to the EY ITEM Club, said that calls to scrap or alter Help to Buy were a "red herring" and doing this could choke off the housing market recovery in the rest of the UK without tackling London's particular issues.
"House prices across most of the country remain well below their pre-crisis peaks and there seems little danger of a bubble developing.
But London, which is suffering from a combination of strong demand and a lack of supply, is increasingly giving us cause for concern."
Recent figures showed that house prices in London increased at more than double the rate of the rest of the UK over last year.
London house prices reached £403,792 on average, while prices across England and Wales generally reached £167,353.
A quarter of all applications for the government's Help to Buy Scheme have been from London and the South East, according to the latest figures. The controversial scheme has been running for three months and is due to continue until 2017.
In the less than three months that the mortgage guarantee scheme has been offered, nearly 750 homeowners have completed their purchases and hundreds were able to spend Christmas in their new homes.
The Prime Minister claimed today that the government's Help to Buy scheme is proving a big success - though figures have shown only a small proportion of people using the scheme are in London and the South East.
Less than 20% of applications to the government's Help to Buy scheme are being made in London and the South East because of soaring house prices, new figures have shown.
The scheme, which means first time buyers can purchase a property worth up to £600,000 with a deposit of only 5%, is failing to take hold in the capital - where prices in some areas can be much higher. In Kensington and Chelsea, for example, the average house price is over £1,500,000.
The Prime Minister has welcomed the news that HSBC will be participating in the Help to Buy mortgage scheme from later this year.
The Government's controversial £12 billion 'Help to Buy' scheme has been launched, allowing home buyers to get up to 95 per cent mortgages.
Under the second phase of the scheme, up to 15 per cent of a property's value will be guaranteed by taxpayers, in return for a fee from the lender.