An accounting term that describes an assets increase in value
In this meaning it is the inverse of depreciation, which is a measure the reduction in the value of an asset over it's normal life-span. Most generally, this label is applied to property or, more specific, real estate land and buildings.
When used to describe currency, appreciation is increase in its worth in a floating rate of exchange.
In times of elevated inflation, asset appreciation becomes common to almost every balance sheet asset. In any workable modern financial system, such property is likely to increase in worth over time, even if the only reason is that scarcity of serviceable land pushes its price into a competitive environment. However, this credence has caused price bubbles to rise a number times.
There are extensive difficulties in interpreting value increases of any specific asset. This mainly arises due to the variety of perceptions that can be tied to the hypothesis of the definition of value, along with the varied tools and techniques employed in the process of valuation.
Mar 12, 2011
Real Estate Finance