I did visit the website of ministry of justice for my country , they are showing indicators for real estate transactions and one of them is the average of price per square meter in a neighborhood.
Example for transactions happened on a neighborhood:
Transaction 1 : 1,500,000 - on parcel with area : 900 > price per square meter = 1,500,000/900 = 1666.67
Transaction 2 : 950,000 - on parcel with area : 600 > price per square meter = 950,000/600 = 1583.34
Transaction 3 : 1,250,000 - on parcel with area : 850 > price per square meter = 1,250,000/850 = 1470.5
In the website they did calculate the average as the following:
sum of all transactions total price / sum of all parcels area
1,500,000+950,000+1,250,000 / 900+600+850 = 1574.4
My question why it's not calculated like this :
Sum of all price per square meter / number of transactions
1666.67 + 1583.34 + 1470.5 / 3 = 1573.5
I know the difference is 1 but some times when number of transaction above 500 not just 3 it will make huge difference between them .
Which one is correct ? why ?