Federal Reserve Bank of San Francisco | Measuring Monetary Policy’s Effect on House Prices
From the San Francisco Federal Reserve’s President Policy Letter from August 2015:
First, monetary policy actions have sizable and significant effects on house prices in advanced economies. That is, an increase in interest rates tends to lower real (inflation-adjusted) house prices. Second, this reduction in house prices comes at significant costs in terms of reductions in real gross domestic product and inflation. A typical estimate is that a 1% loss in GDP is associated with a 4% reduction in house prices. This implies a very costly tradeoff of using monetary policy to affect house prices when macroeconomic and financial stability goals are in conflict.