How Do You Value a London Property? Price per Square Foot Explained
Price per square foot is one of the most quoted figures in London property. Buyers use it to compare homes. Agents reference it to justify asking prices. Headlines rely on it to explain market movement.
Yet for all its popularity, price per square foot is also one of the most misunderstood metrics in London real estate. Used correctly, it is a helpful reference point. Used blindly, it leads to poor decisions and expensive mistakes.
To value a London property properly, you need to understand what price per square foot can tell you and just as importantly, what it cannot.
What Price per Square Foot Actually Measures
At its simplest, price per square foot divides the purchase price by the internal area of a property. The result gives a rough measure of how much buyers are paying for space.
In London, where properties vary enormously in size, layout and age, this metric helps create a common language for comparison. A flat in Mayfair at a certain price per square foot can be loosely compared with another in Kensington or Chelsea.
That is where its usefulness begins and where its limitations quickly emerge.
Why London Is Not a Uniform Market
London is not one market. It is hundreds of micro markets stitched together by transport lines, school catchments, conservation boundaries and street reputation.
Two properties with identical price per square foot can perform very differently depending on factors such as outlook, natural light, ceiling height and even which side of the street they sit on.
Savills and Knight Frank research consistently shows that micro location drives value more than headline averages. A prime street can command a premium that no spreadsheet can fully justify.
Price per square foot does not capture this nuance.
How Quality Distorts the Number
Not all square footage is equal.
A large flat with awkward proportions, low ceilings and poor light may appear good value on a price per square foot basis. A smaller lateral apartment with generous ceiling height, excellent light and strong layout may appear expensive.
Yet buyers consistently pay more for the second option.
London buyers value usability, not just area. Square footage that feels good to live in commands a premium. Space that exists on paper but fails in practice is discounted by the market.
This is why price per square foot should never be used without assessing quality of space.
The Impact of Floor Level and Outlook
Floor level plays an outsized role in London valuation.
Higher floors with lift access often achieve significantly higher prices per square foot due to light, privacy and views. Ground floor properties may trade at a discount, particularly if security or light is compromised.
Outlook matters just as much. A flat overlooking gardens, water or open space can command a material premium over one facing neighbouring buildings, even if the square footage is identical.
Price per square foot averages rarely account for these differences.
Lease Length and Tenure Matter
In London, tenure can dramatically affect value.
A leasehold property with a long lease may trade close to freehold equivalent pricing. A similar property with a short lease can see its price per square foot fall sharply.
Ground rent terms, service charges and building management quality all influence what buyers are willing to pay. These factors rarely show up in simple square footage comparisons, yet they shape real value.
Why Comparing Across Postcodes Is Risky
Comparing price per square foot across different postcodes is tempting but often misleading.
Prime central London areas behave differently from fringe locations. Even within the same postcode, streets can vary widely in value.
Using a single benchmark to judge whether a property is expensive or cheap ignores local supply, buyer profile and historical demand. A high price per square foot in one area may represent strong liquidity. The same figure elsewhere may indicate overpricing.
Context matters more than comparison.
How Professionals Actually Use Price per Square Foot
Experienced valuers and buyers treat price per square foot as a starting point, not a conclusion.
They look at recent comparable sales on the same street or in the same building. They adjust for floor level, condition, lease length and outlook. They assess whether the property sits at the top, middle or bottom of its local quality range.
Only then does the number become meaningful.
Knight Frank valuation insight often highlights that exceptional properties trade outside average ranges because they are not average assets.
When Price per Square Foot Is Most Useful
The metric works best when comparing similar properties.
Two flats in the same building. Two houses on the same street. Two apartments with comparable condition and lease terms.
In these cases, deviations in price per square foot can highlight opportunity or overpricing. Even then, further investigation is essential.
When It Should Be Ignored
Price per square foot should be treated with caution when comparing:
Different property types
Different tenure structures
Different micro locations
Different quality levels
In these cases, relying on the metric can create false confidence.
Final Thought
Price per square foot is a tool, not a valuation.
In London, where character, history and micro location shape value, no single metric can replace judgment. The most expensive mistakes occur when buyers rely on averages rather than understanding why a property commands its price.
The smartest buyers ask not what the price per square foot is, but whether the space justifies it.
In London property, value is not measured only in numbers.
It is measured in how well a home performs over time, in use and in resale.