What type of depreciation is primarily due to wear and tear on a property?

Physical depreciation primarily refers to the loss of value of a property due to physical wear and tear over time. This type of depreciation occurs as a result of the passage of time, environmental factors, and general use, which can lead to deterioration in the property's condition. This includes issues such as damaged roofing, wear on flooring, or the general breakdown of systems and materials that occur as a property ages.

As properties are occupied and exposed to elements, they undergo physical changes that can reduce their market value. Assessing physical depreciation usually involves evaluating the condition of both the structure and its components. This understanding is crucial for appraisers as it allows for accurate valuation, reflecting the property's true current worth based on its condition.

Functional depreciation, on the other hand, relates to a property's decreased utility or desirability due to design flaws or outdated features, while external depreciation involves the impact of external factors unrelated to the property itself, such as changes in the neighborhood. Economic depreciation refers broadly to any decrease in value, but it does not specifically focus on physical elements, making physical depreciation the most applicable type for this context.