Which term describes the increase in property value over time?

The term that describes the increase in property value over time is appreciation. This concept is essential in real estate investment as it reflects the potential of a property to gain value, which can significantly enhance an investor's return on investment. Appreciation can result from several factors, including improvements in the property, increased demand in the housing market, urban development, and overall economic growth.

Understanding appreciation is crucial for investors because it influences their strategies for purchasing and holding properties. For instance, properties located in emerging neighborhoods are more likely to appreciate, making them attractive investment opportunities.

In contrast, other terms such as equity relate to the owner’s stake in the property after liabilities are deducted. Cash flow refers to the net income generated from the property after expenses. Depreciation refers to the decrease in value of a property over time, often due to wear and tear, which is opposite to appreciation. Hence, appreciation captures the essence of value increase over time, making it the correct answer.