In the event of a vote for Brexit, by 2018, houses could be worth up to 18% less than if the UK voted to remain, George Osborne told the BBC.
Andrea Leadsom of Vote Leave rejected this, saying a bigger economic threat “was the perilous state of the euro”.
G7 finance ministers said Brexit could cause a “shock” to the world economy.
An analysis by the Treasury to be published next week will suggest that two years after a Brexit vote, UK house prices could be between 10% and 18% lower than after a remain vote, Mr Osborne told the BBC.
“If we leave the European Union, there will be an immediate economic shock that will hit financial markets… People will not know what the future looks like,” he said.
“And in the long term, the country and the people in the country are going to be poorer. That affects the value of people’s homes… And at the same time, first-time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it’s a lose-lose situation,” he added.
The G7 finance ministers said after two-day talks in Japan: “Uncertainties to the global outlook have increased, while geopolitical conflicts, terrorism, refugee flows, and the shock of a potential UK exit from the European Union also complicate the global economic environment.”
Mr Osborne’s comments echo those made by the International Monetary Fund last Friday, which said Brexit could cause a “sharp drop” in house prices.
But energy minister Ms Leadsom said: “This is an extraordinary claim and I’m amazed that Treasury civil servants would be prepared to make it.
“The truth is that the greatest threat to the economy is the perilous state of the euro; staying in the EU means locking ourselves to a currency zone – which Mervyn King, ex-governor of the Bank of England, has rightly warned ‘could explode’.
“The safer option in this referendum is to take back control of the vast sums we send to Brussels every day and Vote Leave on 23 June.”
Mr Osborne, who is in Japan for the G7 meeting, said that for the UK to retain free movement of EU goods and services, it would have to accept free movement of people.
“It’s absolutely clear if you speak to the finance ministers here from France, Germany and other European countries that if Britain left the EU, and wanted access to the single market, then we would need to pay into the EU budget, and we’d have to accept free movement of people, but we’d have no say over those policies at all,” he said.
He said renegotiating trade treaties would be “extremely difficult to do”, leading to business uncertainty and stifling investment and hiring.
“People wouldn’t have certainty over what their future looked like. And all of that uncertainty would add to the economic costs of leaving the EU. It hits people’s incomes, it hits the value of houses, it hits businesses and jobs,” Mr Osborne said.