The housing market is set to be at the very heart of Chancellor Brown’s Budget on Wednesday of this week.

House prices are roaring away again, see our Returning house hunters set prices soaring story today, and speculation is growing that in the wake of ineffectual interest rate rises, the chancellor has been compelled to introduce tougher measures to stabilise house prices.

We have to remember that Kate Barker, of the Barker report into the supply of housing in the UK fame, is a member of the Bank of England's monetary policy committee.

In her report, Barker claims up to £1.5bn needs to be spent each year to double the number of low-cost homes being built. Barker is reported as claiming the lack of new homes is the key pressure on rising house inflation. It is a key report commissioned by the government and it’s no surprise that it is to be published on the same day as the Budget.

Commentators expect the chancellor to take a strong line and recommend an extra 100,000 homes be built every year.

Chancellor Brown is rumoured to be considering changes to the stamp duty regime as a device for slowing the housing market down. The speculation is that he could introduce new bands of stamp duty at the higher end of the market.

This will anger housing groups who have warned against ‘fiddling’ with the housing market. The National Association of Estate Agents has warned the housing market could suffer a harsh blow if the chancellor is "foolish enough to impose stamp duty increases".

Council tax may come under fire in the Budget too. With the Barker report likely to recommend a property tax more closely related to the market value of individual homes there is clear scope for reform of the current banding system.

And there may be more mention of a tax crackdown on parents gifting their homes to their children but continuing to live there to avoid inheritance tax. “It now seems the government will charge them a notional rent and then tax it," said Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants. "This is a dangerous precedent for the integrity of the tax system because it is using income tax to counteract an inheritance tax problem."