LONDON, April 29 Reuters British house prices rose less than expected this month after expanding in March at the fastest pace since 2004, figures from mortgage lender Nationwide showed on Friday.

Annual price growth slowed to 12.1 in April from March39;s 18year peak of 14.3, after a 0.3 monthly increase which was the smallest since September and well below economists39; average forecast in a Reuters poll for a 0.8 rise.

Nationwide said prices were being supported by a strong job market, but it expected momentum to weaken this year due to stretched affordability and falling real incomes as pay fails to keep up with inflation.

We continue to expect the housing market to slow in the quarters ahead, Nationwide chief economist Robert Gardner said.

Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates, he added.

Most economists expect the BoE to raise interest rates to 1 on May 5, the highest since 2009, and financial markets see interest rates reaching 2.25 by the end of the year, to tackle the highest rate of inflation in 30 years.

Martin Beck, chief economic adviser to EY ITEM Club, said a serious correction in British house prices looked unlikely.

Current economic pressures weigh heavier on lowincome households, who disproportionately rent, than the betteroff, who are primarily owneroccupiers, he said….