What aspect of a property does depreciation account for in valuation?

Depreciation in property valuation primarily accounts for physical wear and tear, which refers to the reduction in value of a property due to its age and condition. Over time, all properties experience deterioration resulting from regular use, environmental exposure, and maintenance challenges. This aspect is critical in estimating the accurate value of a property, as it allows appraisers to reflect the current state of the property compared to its original condition.

In property valuation, understanding the concept of physical depreciation helps appraisers determine how much the property has lost value from its original purchase price due to factors like aging, damage, or neglect. This valuation reflects not only the physical elements but also assists potential buyers and sellers in recognizing the true worth of the property based on its current state.

The other aspects mentioned, such as market fluctuations, location desirability, and future development potential, are related to economic and situational factors rather than the physical condition of the property itself. While they can affect a property's overall value, they do not directly address the wear and deterioration that depreciation reflects.