Think that New Zealand is the only nation that faces house price inflation? Well we are not, but we are in a club of mostly Anglosphere nations that experience rabid house price inflation.

For example, most Australian metro markets have seen their house prices rise dramatically since the early 2000s, as have parts of the United States, Canada and of course, Britain.

However, other places have done better. For example, Switzerland, Germany and Texas.

Given that all these places have different histories and cultures, what can be usefully gleaned by closer study of these different markets?

There are lots of interesting factors to observe in these places, but the question is which could be usefully translated into New Zealand policy?

In the German and Swiss markets there are some striking features worthy of further study in New Zealand.

The first is that local government revenues are tied to taxpayers rather than land. In Switzerland, this takes the form of a local income tax, while in Germany it is through a capitation grant based on population with loadings that cater for citizen residents of different ages.

The result is competitive local governments which not only have to ensure there are good services, but also stable house prices: for many localities high house prices put them at a disadvantage. The planning systems are complex but they have delivered stability over a long period.

However, the effects of this stability are muddied in Switzerland by the existence of extensive rent controls making renting over time comparatively attractive to buying.

In Texas, the incentives for local government are different. Outside of city limits there is virtually no zoning and anyone can start a subdivision through a Municipal Utility District (MUD). It is a statutory water district that debt funds infrastructure and levies its residents to pay for it.

This system was devised in its modern form in the 1970s and has ensured that many Texan cities have been able to bear the costs of expansion. It is obviously more market based than European or Anglo planning systems, and like the others there are trade-offs that come with more freedom: city growth and new arterial routes are the obvious.

Ultimately, there are good lessons that can be taken from overseas jurisdictions, some applicable and some not. But one thing is clear: when it comes to housing, the incentives faced by local government are crucial.

Luke Malpass is co-author of Different Places, Different Means released by The New Zealand Initiative this week.

The on-going housing crisis will be a major topic for discussion at our Miro Summit, to be held in Auckland on 26/27 September 2013.