<p>The <strong>House Price Index (HPI)</strong> is a statistical measure that evaluates the changes in the value of residential properties over time. It is a crucial indicator used to assess the performance of the housing market and the broader economy.</p>

<h2>How It Works</h2>
<p>The HPI is typically calculated using a repeat-sales index methodology. This involves tracking the sale prices of the same properties over time. Here's a simplified breakdown:</p>
<ul>
  <li>Identify a large sample of properties that have sold at least twice.</li>
  <li>Calculate the sale price ratio for each property (current sale price / first sale price).</li>
  <li>Average these ratios to create the HPI for that period.</li>
</ul>
<p>Some indices also adjust for changes in property characteristics (like size or location) to provide a more accurate reflection of price changes.</p>

<h2>Why It Matters</h2>
<p>The HPI matters for several reasons. It helps homeowners, buyers, and investors understand market trends, make informed decisions, and track their wealth. For instance, if the HPI in a particular region is rising, it might indicate that now is a good time to sell a property, as prices are increasing. Conversely, a falling HPI could suggest that buying a property might be more affordable in the near future.</p>