What does classical economic theory emphasize about property value perception?

Classical economic theory emphasizes that property value is shaped by both the use value, which reflects the utility and benefits a property offers to its owner or user, and the exchange value, representing what a property can fetch in the marketplace. This dual consideration acknowledges that a property's worth is not merely determined by its physical characteristics or location but also by the local demand and overall economic conditions that can affect how much that property can be sold or leased for.

This perspective aligns with the understanding that the function of property—how it is used or what purpose it serves—plays a crucial role in determining its market value. Both use and exchange dynamics interact within the market, making this a fundamental concept in real estate economics. Understanding this interplay helps investors and analysts make informed decisions based on potential income generation from the property and its resale prospects.