Wednesday, 21 April 2010

Basis for revolution?

My friend down in London was shocked to find that his neighbour's four bedroom house recently sold for nearly £600,000. He'd bought his place about 25 years ago as a home for about £33,000. That means while the value of the building as a home is unchanged the price has changed on average 12% every year during that period. It is crazy money way above the rate of inflation during  that period. 

What it means is that young people wanting to buy the place would have to raise a deposit of  £120,000 before they could get a mortgage. The deposit alone is about four times what a young graduate would be earning in his/her mid-20's.  When my friend bought his house he tells me that the total price was about three times his annual salary as a computer analyst. How on earth are young people going to be able to afford a home for their families?

The stealth tax called Student Loans makes matters worse. Young people are now expected to get themselves into debt at the start of their careers to pay the stealth taxes called University fees and accommodation costs. If they already have the burden of the Student Loan how on earth are these young people expected to raise the money for a deposit?  In my early days, if you worked hard and passed your exams you could go to university and get a government grant to pay for your living expenses. There were no university fees. In effect the country invested in its graduates.  Now, in effect, students have to pay tax to go to university. It is a deferred tax called a loan but it is still a tax. This is the result of continued dishonesty by successive governments who have shifted the support away from students.  

The whole problem is not helped by the inefficiencies and greed of the Universities who expect an ever increasing cash supply to feed their bloated salaries for very short working hours.


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