Following Gordon Brown's move next door to No. 10 Downing Street, housing has shot up the political agenda.

The new Prime Minister has used a series of keynote speeches to outline several housing challenges, one of which is affordability. Brown argues that demand for housing is rising faster than supply - current projections indicate that the number of households will rise by 223,000 a year until 2026, while the number of new homes due to be built annually is only 185,000 (below the current target of 200,000). This creates affordability problems for both renters and buyers, and, as is well documented, young people in particular continue to find it increasingly difficult to become homeowners.

Brown's focus on housing is also political. By appropriating home-ownership - an issue linked so strongly to Margaret Thatcher's Government - he is attempting to put further pressure on David Cameron's leadership of the Conservative Party. And by focusing on issues like affordable housing, Brown is beginning to renew his government's credentials as the 'party of aspiration', in touch with the country's major priorities and concerns.

Published in July 2007, the Housing Green Paper builds on many of the Prime Minister's early pronouncements, focusing on the need to increase housing supply across the whole of England, improving affordability, as well as quality of design and environmental impact.

On affordability, it outlines several short- and long-term proposals. In the short term, there is to be £3 billion extra committed during 2008 10 to fund 60,000 additional affordable homes. Over the longer term, the Government plans a further increase in the rate of home building - two million new homes by 2016, and three million by 2020. New building will be largely in the Greater South East, although Northern towns and cities will be able to bid for a second round of New Growth Points, and for the new eco-towns initiative.

The Government intends to use more public sector and 'brownfield' land in reaching these targets, but the Green Paper does not contain fundamental changes to the Green Belt policy. Nevertheless, with the Tories ramping up their rhetoric on the risk of 'unsustainable urban sprawl', we should expect a significant debate over the future of Green Belt land to ensue in the coming months.

Local authorities are to have a new strategic role in delivering housing and potentially the power to keep capital and rent receipts from the provision of affordable housing - rather than giving them back to Whitehall. But the Paper is clear that local authorities will not be able to meet these housing challenges alone. A far greater role in the delivery of housing - including affordable properties - is envisaged for the private sector. This is shown by proposals for local authorities to establish new asset-backed vehicles called Local Housing Companies - joint venture companies for local authorities to develop public land for affordable housing.

However, there is real scope for new tensions to develop between local authorities armed with greater freedoms and new tools, and the determination of central government that more building will happen. Similar tensions could develop as the private sector becomes more involved in partnerships with local authorities, and the boundaries between their respective roles blur considerably.

In any case, it is not clear that simply injecting more money into the process, providing local authorities with greater powers and reforming the planning system (another Government objective), will be sufficient to solve the affordability crisis. Ultimately a large increase in the number of homes will, in the short term at least, have an adverse effect on the housing market for property developers. A new framework of financial incentives may be necessary, then, in order to encourage developers to risk the size of their immediate profit margins and help the Government meet its long-term building targets.

The Green Paper declares that 'young families can no longer afford for national ambition to be met with local opposition'. But the Paper is not clear on how the potential negative scenarios outlined here might be avoided or how new funding streams, delivery tools and agencies will operate in reality.

If Gordon Brown is to deliver on his promise to tackle the challenges of housing affordability, then these issues will need to be addressed when the Green Paper is taken forward into a new Housing Bill in 2008.