House prices fell at the slowest pace in a year over the past month but the pain for homeowners is far from over, experts said yesterday.

The value of an average property dropped by 0.4 per cent, or £430, during November, according to figures from Nationwide, the UK's second-biggest mortgage lender.

That was the most modest decline since prices started falling in November last year, and eased the annual rate of decline to 13.9 per cent compared with October's year-on-year drop of 14.6 per cent.

However, analysts said that this did not signal the bottom of the market. Seema Shah, property economist at Capital Economics, said: “We expect the sharper downward trend of recent months to reassert itself.”

Fionnula Earley, chief economist at Nationwide, said that the Bank of England's 1.5 percentage point cut in interest rates earlier this month could help some borrowers. But separate figures indicated that the Bank's move failed to boost confidence substantially among consumers as fears mounted over soaring unemployment.

The gauge of consumer confidence, compiled by GfK NOP, the market research company, on behalf of the European Commission, edged up slightly in November, but remains near the record low set in July.

Rachael Joy, of GfK NOP, said: “UK consumers are still being battered by news about our poor economy in general and mounting concerns about job losses in particular.”

House prices are £25,000 lower than they were in November last year, according to Nationwide's figures, but there are signs of more falls to come.

Recent figures showed that sellers, desperate to attract buyers, had slashed their asking prices by nearly £17,000 in the past fortnight. One property expert said that developers were offering up to 50 per cent discounts as they tried to shift newly built apartments.

Stuart Law, the chief executive of Assetz, the property investment adviser, said: “Bankers are forcing developers to sell to get their hands on some cash. We have seen some apartments officially priced at between £120,000 and £140,000 being offered for as little as £65,000.”

The fall in prices has thrown nearly half a million homeowners into negative equity but there are fears that millions more could be affected before prices begin to recover. Some economists have predicted that prices will fall by another £38,000 before the market bottoms out.

“We think house prices will fall to a low of £125,710 in 2010, which would be 32.5 per cent below their peak,” Howard Archer, of IHS Global Insight, the economic consultancy, said.

Michael Saunders, of Citigroup, has forecast that three million homeowners, or more than a fifth of households, could be left in negative equity if house prices fall by another 15 per cent.

The current downturn is also causing more homeowners to fall behind with payments. The number of borrowers in arrears rose by 12,000 between July and September, pushing the total to 168,000.

Borrowers with less than perfect credit records are struggling the most, new figures suggest. A record 25 per cent of all UK sub-prime home loans packaged up and sold on by lenders were “delinquent”, meaning that borrowers were behind with the repayments, between July and September, figures from Standard & Poor's, the credit ratings agency, show.

Activity in the housing market has stalled as first-time buyers struggle to secure mortgages. Mortgage lenders, caught in the grip of the credit crunch, are refusing new loans to borrowers who do not have a sizeable deposit.

Nationwide indicated that government help for lenders in accessing additional funding was crucial to kick-starting the housing market.