by Phil Pitt

House price inflation could reach double digits in the next 12 months, according to the chief executive of Kent Reliance.

It comes on the day the Council of Mortgage Lenders revealed the number of new mortgages granted across the UK leapt 23 per cent in June.

But Kent Reliance boss Mike Lazenby says, at the moment, the UK housing market is still in a mess.

"That 23 per cent increase comes from a very low base. Those who are lending money are doing so to very strict criteria, and that is preventing many first-time buyers, who are crucial to getting the market moving again, from getting loans," said Mr Lazenby.

He believes most building societies have their hands tied in the amount of money they can lend. "Regulations at the moment require building societies to hold artificial levels of liquidity, and until that is relaxed there will not be a significant change in the number of approvals."

Mr Lazenby believes much of the increased interest in property in the London area is fuelled by speculative buyers, mainly from abroad, who are not tied into the UK’s finance industry.

But he says as confidence returns to the market as the economy picks up - perhaps next year - prices will begin to rise again, and the South East will be bouyed with a knock-on effect of the looming 2012 London Olympics.