In the summation approach to valuation, what does the term 'depreciation' primarily refer to?
Correct Answer
D) The loss in building value from deterioration and obsolescence
In property valuation, depreciation represents the loss in building value from its replacement cost new due to physical wear, functional obsolescence, and external factors. Land typically does not depreciate in valuation calculations.
Why This Is the Correct Answer
In the summation approach, depreciation is the loss in value of the improvements compared with their replacement cost new. It covers physical deterioration, functional obsolescence and external obsolescence, and it is never applied to land.
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More Valuation Questions
In applying the summation approach to value a heritage-listed property in Sydney, which additional factor must be specifically considered?
In Queensland, the statutory land valuation that councils use to levy rates is made by:
The comparable sales method of property valuation involves:
A Queensland property owner disagrees with the Valuer-General's valuation of their land. The owner may:
When valuing an income-producing property in Queensland using the capitalisation approach, a valuer primarily considers:
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