This topic has been discussed a few times previously.
Pensions are a very effective savings vehicle for UK taxpayers and most people aiming for FI should make use of them. If you're paying tax at 40/60/45% marginal rate, then the ability to put money into the pension without having paid tax is pretty important. If you earn say £120k, then you could pay £20k into your pension and have an income of £100k, or pay effectively £12k in tax and have £8k available immediately. One increases NW by £20k, the other by £8k. Clearly you can grow your NW much faster by using pension tax breaks (and that's before any employer contribution, national insurance benefits from salary sacrifice) - downside being higher charges, potential risk of government raids on the money, income tax payable when withdrawing the money and the fact that it's locked up for years.
Rather than taking a simplistic 4% SWR approach, you need to think about having multiple pots of money. If you just have a DC pension, it's really 2 pots - one is the pot of money that provides your income from your RE date up until the date your pension is due and the other is the pension that is providing income after that date. You potentially should also factor in the state pension some years after that. It's then a question of balancing the two pots appropriately. In your case, provided you have at least 11x your annual needs outside of the pension wrapper (and the total NW comes to 25x) you're good.
As you're talking about downsizing from London, there are potentially other options to explore if you have too much in the pension and not enough outside of it. You could take out a (small) interest only mortgage to increase the size of your pre-pension stash with the aim of repaying it when pension is available - you can take 25% immediately from the pension free of tax to do that. Doesn't sound like you'd need to do that though.
In terms of housing equity, it certainly counts when thinking about NW - money is fungible as you say. It only counts for the purposes of providing you with an income at the point where you actually downsize or move to a lower cost of living area outside London. Until then, it simply represents pre-paid housing costs in an expensive location. As most people in the UK have most of their NW tied up in housing, you can't simply discount it though.