Do house prices fluctuate more than fundamentally justified? In this paper I develop a model where the fundamental house price is defined as the present value of future imputed rents. The imputed rents are calculated as the fundamental value of rents. The comparison of the fundamental house prices with actual prices indicates that house prices fluctuate more than fundamentally justified. To explain this, I develop several model variations with alternative assumptions about expectations. Irrationality of the agents can be seen as one of the reasons for the excess house price fluctuations.