For Sale and To Let boards advertise properties in Birmingham, England.
For Sale and To Let boards advertise properties in Birmingham, England. - 
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LISA NAPOLI: When in doubt, lower your expectations. The National Association of Realtors is saying it expects existing home sales to decline this year. Where is the most expensive residential real estate in the world? Pat Loeb says a new report pins the needle on London.

PAT LOEB: Houses in London cost a cool $4,600 a square foot. That makes No. 3 New York look cheap at $3,200 a square foot.

Knight Frank researchers say an elite group of buyers known as high net worth individuals is driving these prime real estate markets. They're people with at least $10 million to spend.

In London, most of these buyers are from outside the country. Sixty percent come from Russia, the Middle East or America.

Some investors may choose London to avoid taxes, according to Lucy Komisar. She's a journalist and the co-chair of the Tax Justice Network. She says England doesn't tax income made outside the country by people who are not permanent residents.

LUCY KOMISAR: It just means you have to spend a certain amount of time outside the country. But for these people with their own jets, that's pretty easy.

Komisar says the boom in London real estate is bad for locals, who can't afford to buy — or even shop — in certain neighborhoods.

I'm Pat Loeb for Marketplace.