Saturday, April 14, 2012

The vanishing middle class

A friend said something quite surprising a couple of days ago. There is hardly a middle class left, just a small circle of the very rich and a large mass of the less well off.

My friend has a small flat in Borella that he was trying to sell for around Rs.15m that has attracted very limited interest. I have another friend who has a nice house in Kotte for sale for Rs.21m and he has been waiting for over two years with no serious offers.

My friend thinks, there is fair interest for houses upto a value of about Rs.4-5m. There is also not much difficulty in disposing a flat at Monarch, Empire City, Emperor or Iceland for Rs.70m+. Houses and flats in the range of Rs.10-25m, prices that should be affordable to the middle class, bring forth very few buyers.

I think consumption taxes and price increases over the past decade have hit the middle class disproportionately, while they have (in general) been unable to cash in on the big deals that have taken place over the past few years.


Anonymous said...

I rather think it is the super rich vs everyone else. Only the super rich of which there are probably less than 10,000 families islandwide (only a guess) have amassed large sums, by fair means or foul and are able to enjoy what money can offer, without desperate anxiety.

All the rest of us whether it is to buy a Rs20M property or a Rs4M property have to think a lot before putting this money down.

You must realize there are more who can plonk Rs4M to those who can Rs20M so that is a matter of degree, they are all in the middle class.

This middle class, are those who have jobs, all the way from a family income of Rs25,000 to Rs500,000 and they all have the same issues. How pay for a home, how to pay for kids education, be it private or state and transport means etc. Of course the higher one's income the higher some of the expectations are but the problems of making ends meet is still the same.

The executive on Rs500,000 dreads the day he loses that job, as often he may not be able to easily find a commensurate one and have to move down a few pegs back down to Rs100K or Rs200K. That too is shattering when faced with.

Anyone below that income level just lives on inherited land or homes or with the in-laws!

bingo said...

very true....
we can notice this impact even on vehicles now..more lexus less marutis

Jack Point said...

Thanks Anon for that detailed comment. Bingo, true.

Dee said...

I met a Spanish lady who teaches at the local uni recently (the uni administration is a MESS and the worse she has ever experienced, having worked around the world -apparently..but later on that) and she said she may have to consider leaving as the salary she gets cannot help her get by once she pays the rent, food and traveling. She said of all the countries she's been in (including india etc...) ... Sri Lanka has been the most expensive. Sigh...imagine our predicament...