Location, Location, Location: How Much Does London Distort the Picture?

As of November 2025, the average home in London cost £556,044, against £294,466 in England and £272,248 across the UK as a whole ^[1]. London alone is worth roughly double the national figure. "Location, location, location" is the oldest cliche in property, but it raises a real question for a site built on national averages: how much of the national picture is actually just London, and how much of London's own premium is domestic desirability versus money from abroad?

• UK excl. London £250,113
• England excl. London £266,965
• United Kingdom £272,248
• England £294,466
• London £556,044

It's worth going one step further than the headline nation-vs-capital comparison. Stripping London's own sales out of the England and UK figures entirely, using the same underlying transaction-weighted dataset, leaves an average home price of £266,965 for the rest of England and £250,113 for the rest of the UK ^[1], both meaningfully below the published national averages. London isn't just an outlier sitting on top of the national figure; it's propping that figure up.

The Superstar City Effect

Economists Joseph Gyourko, Christopher Mayer and Todd Sinai call cities like London "superstar cities": places where the supply of land is effectively fixed, and a growing number of high-income households nationally compete for the same scarce, unique locations ^[2]. Prices in these cities decouple from local wages because the buyers bidding them up aren't only local; they're the country's highest earners choosing where to live. This mechanism would produce a large London premium even if not a single overseas buyer ever entered the market. It's also not a one-way ratchet: in the twelve months to November 2025, London prices actually fell 0.7% while the UK as a whole rose 2.9% ^[1], a reminder that the premium is a deep structural gap built up over decades, not evidence of an active, ongoing price surge.

How Much Is International Demand, Really?

The most detailed answer comes from a University of York study commissioned by the Greater London Authority, which traced Land Registry sales of new-build homes across London between April 2014 and March 2016 ^[3]. Overseas buyers accounted for 13% of all new-build sales London-wide, rising from 10.5% in 2014 to 17.9% in 2016. That share concentrates enormously in the prime central boroughs: overseas buyers made up 40.8% of sales in the City of London, 37.9% in Westminster, and 32.2% in Kensington & Chelsea, against just 5.7% in outer London ^[3].

• Outer London 5.7%
• Kensington & Chelsea 32.2%
• Westminster 37.9%
• City of London 40.8%

But those three prime boroughs account for only around 7% of all new-build sales in London. Overseas money is genuinely concentrated at the very top of the market, but the top of the market is a small slice of the city, which is why the researchers describe its direct effect on London-wide prices as limited.

Occupied, Not Empty

The other half of the "investment demand" question is whether these homes sit empty. Using commercial and administrative data as a proxy for occupation, the same study inferred that 10.2% of new-build homes across London were under-used in some way, rising to around half in prime central London specifically. Overseas owners were more likely to hold an under-used property than UK owners (42.3% versus 5.6%) ^[3]. But because overseas buyers are a minority of the market, the absolute numbers were close either way: an estimated 402 under-used homes owned overseas against 389 owned by UK buyers, in a sample of under 8,000 properties. Even the "empty homes" story, once you look past the headline percentage, turns out to be roughly split rather than a story about foreign money alone.