On the other hand, people who buy second homes may bring wealth and spending power into the area. It depends how long they spend in their second house. If it is only 2 or 3 weeks a year then the area will not benefit. If they rent the house cheaply to local people in the intervening years it will be less damaging.

It also depends whether supply can increase to meet the demand for second houses. The problem in the UK is that it is often difficult to build new houses, especially in these tourist areas most affected by people buying second houses.

The motives for buying a second home are often split into:

• Desire to have holiday home / 2nd house.
• Desire to make capital Gains from rising house prices. With change in fortunes of UK housing market, there may be less demand in forthcoming years.

Forecasts for Second Homes in the UK

In addition to tourist areas. Demand for second homes is also increasing in University towns, where parents can sort out accomodation for their children and have the potential for capital gains. Towns like Bradford and Manchester have the best potential for future capital gains.

Popular Areas for Second Homes in the UK

London, Snowdonia, Birmingham

Also in recent years, the availability of mortgage finance has played an increasing role in influencing house prices. When mortgage companies are keen to lend a range of unconventional mortgages demand for housing will rise. But, in a credit crunch mortgage products are withdrawn leading to lower demand.

For more detailed analysis see: Factors that determine house prices 

However, the price of houses in the north has an increasing variance between different regions. For example within a city like Manchester or Leeds, house prices can vary by upto 80% between different areas of the city.

House Price fall?

Some areas of the housing market in the north are starting to look overvalued and could be suspect to a fall in prices. In particular, there has been a boom in the supply of flats and apartments leading to oversupply and a glut on the market. With the housing market tightening, this is likely to exacerbate the problem.

0% stamp duty on houses upto the value of £125,000

1% on homes priced between £125,000 and £250,000

3% for homes between £250,000 and £500,000

4% for homes valued at more than £500,000

However, the average first time buyer is still paying a lot more stamp duty because of rising house prices. It is estimated that the average first time buyer pays over £1,670 extra duty since 1997, when Labour came to power.

The number of houses valued at £250,000 or more has tripled over the past three years from 1.8million to 5.5 million in 2007. Therefore, many people are having to pay the extra costs of stamp duty, in addition to the extra mortgage costs.

Furthermore, house buyers are also faced with the cost of HIPS, which has been criticised for adding red tape and unnecessary costs to buying a house.

Recent articles include:

• Is 2008 a good time to buy a house?
• Predictions for UK House prices 2008
• State of Buy To Let Housing Market

The increase in housing supply is in response to the concerns over difficulties facing the younger generation in getting a foot on the property ladder. The tripling of house prices in the past 12 years, is in large part, due to a chronic shortage of supply.

However, although he has promised an extra 3 million homes building them may not be so easy. Often local councils are keen to protect greenbelt land and avoid extra environmental pollution.

In other news the US dollar fell again in response to concerns over the US housing market. Falling house prices were now feeding through into lower consumer spending. Their are fears that this will soon pass onto Wall Street. Despite a massive increase in home repossesions and mortgage defaults, there is no sign that the Federal reserve are looking to cut interest rates at the moment.

Dollar falls again – Guardian

Affordable housing has become an important political issue, in recent years. It stems from the rapid rise in house prices, making it increasingly difficult for first time buyers to get on the property ladder. Affordable housing is often targetted at certain key workers in the public sector. However, there are concerns that some low paid workers, not in these key public sectors will loose out.

Difficulties in making affordable Housing a reality

Many ministers and politicians have agreed on the importance of more affordable housing; however, to make this a reality is not as easy as they would like us to believe.

1. Local Authorities.

Planning permission for most housing plans are still under the discretion of local authorities. Therefore, they are in a position to block new housing schemes.

2. Scale of the problem.

At the moment new housing is been built on a small scale.  To adress the balance it will require a huge investment in building new housing

3. Difficulty of finding space in the South of England

There is already a shortage of land in certain areas. It is not easy to find land in the south of England that is OK to build on.

4. Time Delays

The process of applying for planning permission, getting it approved and then building houses is very time consuming. The government may need to find a new procedure to cut red tape

Understanding the affordable housing situation in the UK at BBC