Few indices are watched more closely than those that track house prices. On one level that's rational. Two-thirds of households own their home, most of them with a mortgage. Changes in house prices therefore have a huge impact on most people's personal balance sheet - almost certainly a much greater impact than stock market movements. But, on another level, watching what is commonly thought of as 'house prices' is pretty irrational, because the indices are a fairly poor indicator of the value of your home.