What Is Economic Depreciation?

Economic depreciation, also known as external depreciation, refers to the loss of value caused by various adverse factors other than the building itself, including excessive supply, insufficient demand, deterioration of the natural environment, noise, air pollution, traffic congestion, changes in urban planning, government Policy changes, etc. In reality, it is not difficult to find that the market prices of two residential quarters with similar locations and physical conditions may be very different. The reason is that there is a factory near a low-priced residential quarter.

Economic depreciation

Right!

Economic depreciation, also known as external depreciation, refers to the loss of value caused by various adverse factors other than the building itself, including excessive supply, insufficient demand, deterioration of the natural environment, noise, air pollution, traffic congestion, changes in urban planning, government Policy changes, etc. In reality, it is not difficult to find that the market prices of two residential quarters with similar locations and physical conditions may be very different. The reason is that there is a factory near a low-priced residential quarter.

The above-mentioned material depreciation belongs to tangible depreciation, while functional depreciation and economic depreciation belong to intangible depreciation. Some depreciation will decrease or even disappear for some reason.