This paper investigates the transmission mechanism and the effect of monetary policy in the real estate market. A structural VAR (SVAR) model is estimated using a data set comprising of monthly series over the period of 2007 to 2012. Statistical analysis, ADF unit root test, co-integration test and impulse response analysis are successively conducted. The results of this investigation show that monetary policy transmits to real estate market through interest rate channel, credit channel and asset-liability channel, and it exploits the wealth effect, pulling effect and crowding-out effect of the real estate market to regulate macro economy.
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