So there is both a theoretical and an empirical relationship between real estate prices and interest rates but they have nothing to do with mortgages per se - y

So there is both a theoretical and an empirical relationship between real estate prices and interest rates but they have nothing to do with mortgages per se - you will find that this roughly holds true even in countries where mortgages aren't available. The reason is that even in a world without mortgages, real estate tends to yield either payments (as an investment) or benefits (as the owner) that are roughly fixed and not entirely based on interest rates. If you consider the value of real estate to roughly equal the sum of discounted cashflows, this means the lower the interest, the higher the value. Note that in theory, only land prices move this way, not the value of improvements, since the value of improvements is strongly tied to the cost. So if you consider the value of housing theoretically as a sum of land and improvements, only the land portion is subject to interest rates. So some have observed here that empirically the connection between real estate prices and interest rates has been weak - this will be the case in real estate markets dominated by the cost of improvements (most US markets until fairly recently I believe).