How to read a house price index without fooling yourself

"Prices in Lewisham rose 2%" can mean three different things. The average price of what sold went up. The same homes are worth more than they were. Or sellers are asking for more. The first is noise, the second is a house price index, the third is a leading indicator. This article is about the second, because it is the one most people misread.

An average moves when the mix moves

Take a month in which more four-bedroom houses than usual came to market and sold. The average sale price rises. Nothing about the value of any home in the area has changed; the mix of what sold has. A repeat-sales index removes that by only looking at pairs: the same property sold twice, and how much the price moved between the two dates. Thousands of pairs, weighted and stitched together, give a series that measures price change rather than composition.

That is why MarketCode's house price index does not report a price at all. The level is an index, base period 1995-01 = 100, published monthly for every postcode district and local authority in England and Wales with enough repeat sales. The Lewisham page shows it as a line; the number to read is the change, not the level.

What the forecast tail means

HM Land Registry registers a sale weeks to months after completion. So the most recent months of any sold-price series are incomplete, and an honest index has to say so. Every series carries a last settled period, the last month the registry has filled. Points after it are forecasts, flagged as such, with a lower and upper band. On the market pages they are the shaded part of the line.

Quote the settled move. A twelve-month change that ends in a forecast month will be revised, sometimes by a percentage point, as the late registrations land. The registration lag is the single most common reason two people quote different figures for the same area in the same week.

Why a thin area borrows the national series

A repeat-sales index needs pairs. A small district with a few dozen sales a year does not have enough of them to carry a series of its own, and a noisy local line would be worse than no line. Where that is the case, the platform publishes the national index against the area and says so in the series' provenance: the method reads repeat_sales_national rather than repeat_sales_area, and the page says the turns are national, not local.

This is a deliberate choice over a gap. A gap is filled silently by whoever reads the page, usually with the nearest number they can find. A labelled fallback at least tells you what you are looking at.

Carrying a price to today

The practical use of an index is re-basing. A flat bought for £280,000 in June 2016 in a district whose index stood at 620 then and 760 now is worth, on the index alone, £280,000 × 760 / 620 = £343,000. That is not a valuation; it is what the area did, applied to one sale. The equity estimate on a property page does exactly this, and the full valuation uses the same series to draw its back-series, so the two agree by construction.

The three series that are not this one

• The asking-price index is built from listings, not sales. It leads sold prices by months and includes homes that never sell. Useful as a signal, never as a price.
• The market cube gives prices by cohort: two-bedroom flats, three-bedroom terraces. Those are levels, with an evidence grade on each cell, and they move with the mix by design.
• Transaction volume is a count of registered sales. It says how big and how liquid a market is, not what it costs.

Do it today

Connect Claude, ChatGPT, Codex or Cursor to the MarketCode MCP server and ask: "Give me the house price index for Camden over ten years, say whether it is local or national, and tell me the last settled month." The answer names the method and the settled period, because the tool description tells the assistant to. Or open the Camden market page, where the same series is drawn and the same caveats are written under it.

The methodology page explains how the index is built and where it is weakest: it cannot see a property's first sale, and it treats a refurbished home as the same home, which biases it up a little where an area has been heavily improved.