Switzerland

From a Swiss point of view, it must be hard to imagine how fascinating, thrilling and attractive the small-scale political structure of the country appears from the outside – and that foreigners looking at Switzerland may find the workings of Swiss cantons and councils interesting or even inspiring.

Europe’s central bank has manoeuvred itself into a hole and the introduction of quantitative easing shows that it won’t stop digging. At least the Swiss National Bank got out before being dragged down any further.

If you are a gold bug, and if you think the majority of the Swiss are too, you might want to consider adding some of the yellow stuff to your portfolio. But be careful – even in Switzerland, referenda can result in surprises, and not every opinion poll that glitters is gold.

The EU always had a strange relationship with democracy, not least because it does not always generate the results EU officials would like to see. The Swiss referendum is a case in point.

The strong link between local government finance and housing development fully explains why German and Swiss house prices have been steady for decades. To say it with Sherlock Holmes, improbable as it seems “all other explanations are more improbable still”. If Australians really cared for making housing more affordable in the long run, they should be studying the German and Swiss experiences more closely.

The enormous Swiss currency reserves are a direct result of the euro crisis as the SNB is fighting an uphill battle to stabilise the Swiss Franc against the weakening euro. Switzerland’s central bank soaks up euros and sells off francs on a massive scale.

For policymakers, the lesson is clear. If they are concerned about housing boom and bust cycles, they have to quash the expectation that house prices will continue to rise. To do that, they need to examine property markets with long records of house price stability, and learn from them how to ensure that when more housing is needed, more can be built.

We believe that implementing both reforms – of the planning system and of local government finance – would make the supply of housing more flexible and deliver the kind of well-designed, spacious, affordable housing in green cities which the citizens of Germany or Switzerland take for granted. We hope that it is not too late to change a system that, to date, has nothing better to boast about than ever-rising house prices.