Economic obsolescence arises from a change beyond the property's boundary
A worked RES examination question on obsolescence and depreciation, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Consider the effect of the January 2026 rezoning on the walk-up blocks.
- (i) The loss of value arises from a change beyond the boundary of the development.
- (ii) Mr Tan could have prevented it by maintaining his own unit more thoroughly.
- (iii) The cause lies outside the owner's control and is not curable by him.
- (iv) The rezoning is an instance of economic obsolescence.
The answer, and why
Answer: C
The rule. Economic obsolescence arises from a change beyond the property's boundary. It is outside the owner's control and cannot be cured by anything done on his own land.
Why C is correct. (i) the bus depot rezoning is on an adjoining plot; (iii) it is outside Mr Tan's control; (iv) it is economic obsolescence. (ii) is false — no amount of maintenance to his own unit answers a depot behind the block.
The other options.
- A and B carry the false (ii), which is the point of contrasting the rezoning with Mr Tan's conscientious upkeep.
- D drops the correct (i).
Exam note. The stem gives Mr Tan's maintenance record precisely so that (ii) looks plausible. Maintenance answers the fabric, never the neighbourhood.
More on Obsolescence and depreciation
Read all Obsolescence and depreciation questions on one page →
Want a full paper instead of one question?
The free half-paper is 20 questions with a Section B case study, explained to this same depth. The paid sets are ten full 80-question papers across Paper 1 and Paper 2, every figure checked against the current IRAS, CEA, HDB, URA and SLA position.
Looking for past-year papers? CEA doesn't publish them — here's what it does publish.
Independent study material. Not affiliated with or endorsed by the Council for Estate Agencies. No pass guarantee — for study use only.