British buyers are "emboldened" in the London property market and now account for nearly eight out of 10 new sales.
Overseas buyers account for just 21% of sales, as recent tax changes breed new caution.
Total buyer demand in London rose 4% during the third quarter, while supply of properties fell 5%.
Yet this hasn't translated into higher prices, with prime London property values still 0.8% lower than a year ago, despite a 0.3% rise in Q3.
Marsh & Parsons, which collected the figures, expects prices to rise by 4% next year.
Domestic buyers made 79% of property purchases in the third quarter, up from 75% a year ago.
Overseas buyers and investors are more cautious due to stronger sterling, stricter Government measures on non-domicile status, and heftier stamp duty for higher value purchases.
Peter Rollings, chief executive of Marsh & Parsons, said the London property market has borne the brunt of recent tax changes.
“This has cast some shadows over the capital, but the millions of Londoners who live and work in the city have acclimatised much more quickly to the property taxation changes, and have risen up to fill the void left by overseas purchasers and investors."
The premium paid for prime central property has now fallen from 98% in 2013 to 74%.