Indeed, divisions within the Monetary Policy Committee recognise this dilemma, but do not accept there already exists a mechanism that could act just on the housing market. It is stamp duty. A refined duty, with more bands, regional variations, and levels varying in time according to circumstances, would smooth out house price rises, and employment in the construction industry.
Interest rates could then be used more sparingly and less dramatically in a more stable environment that would be more similar to our European neighbours. Certainly there would be a greater chance of meeting the convergence criteria for monetary union. We must recognise that we have special factors as regards home ownership and population distribution, and that loading all responsibility on interests rates is unnecessarily detrimental to other aspects of the economy.