House prices have now fallen by 17.6 per cent as sharp cuts in the interest rate failed to boost sales.

The latest Nationwide house price index found the average cost of a home fell by 1.8 per cent to £147,746.

Anyone who bought a house in February last year will have seen on average £31,612 wiped off the value, the survey showed.

Fionnuala Earley, Nationwide’s chief economist, said: “Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls.

“Early signs of increased interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.”

David Smith, senior partner at Dreweatt Neate estate agents, added: “While transaction levels overall remain low and mortgage finance is still difficult to secure at higher loan-to-values, increasingly there are reasons to be positive and we do believe that now and the next six months are the trough for house prices.”

The interest rate cuts have made mortgages cheaper for existing borrowers, Nationwide said.

About one third of the overall stock of mortgages is on a base-rate tracker mortgage. For these borrowers, the 4.5 percentage point fall in rates seen since the end of 2007 means that their monthly mortgage payments have fallen by around £240 per month.

Borrowers in the highest priced areas have seen the biggest change to their housing costs, with Londoners seeing monthly savings of more than £350 and those in the northern region seeing nominal falls of just less than half this amount, Nationwide said.