Planning applications for new luxury homes have almost doubled; £88 million worth of two bed flats sold in just 12 weeks; resi prices have reached new record highs; Mayfair is the West End’s most expensive address and Soho has overtaken Marylebone to become the district’s new residential development hotspot. These are some of the findings of a new analysis of the residential market in London’s West End by estate agent Wetherell.

Wetherell commissioned market intelligence group Dataloft, to analyse the latest Land Registry, Lonres and Wetherell property data in order to obtain average values for apartments sold across the districts that comprise London’s West End during the last six months (Feb to July 2013), compared with the same six month period in 2012 and 2007. In order to evaluate the impact of shifting residential values on developer confidence in the West End residential market, planning applications (as recorded by the EGI London Residential Research database) for private-sale new homes were also analysed between January to July for 2013, 2012 and 2007 and compared against the residential values. Finally, in order to get a “snapshot” of sales volumes during 2013 and 2012, Wetherell and Dataloft analysed quarterly sales volumes between May-July and Jan-March 2013 and May-July 2012.

In its review of the average values for flats sold across London’s West End during the last six months, the Wetherell survey has found that Mayfair is the West End’s most expensive residential address. Values in Mayfair stand at £2.5 million (£1,940 per sqft), up 2.6% from £2.44 million  in 2012.

Soho has now overtaken Marylebone to become the West End’s new residential development hotspot. Apartment values in Soho currently average £1.6 million (£1,404 per sqft), up 55% from £1.05 million (£1,,052 per sqft) in 2012. Marylebone, once the second most expensive address in the West End, has slipped down the rankings, with values now standing at £1.16 million (£1,296 per sqft), up 9% from £1.06 million (£1,146 per sqft) in 2012. Fitzrovia and Tyburnia remain the two cheapest places to purchase apartments in London’s West End, with average values currently of £974,000 (£1,157 per sqft) and £966,232 (£1,070 per sqft) respectively.

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Wetherell highlight that rising sales and prices have further boosted residential developer confidence in the West End as a residential address. The number of new private-sale homes in the development pipeline the West End has almost doubled. Between January to July 2013 there are 72 planning applications for new residential developments across the West End, providing 546 new homes. This can be compared to 52 planning applications, providing 310 new homes, over the same period in 2012, and just 7 applications, providing 32 new homes, in 2007 (the height of the last boom).

Rising prices have resulted in Soho, centred on Soho Square and surrounding roads, becoming one of the major new developments hotspots, with 145 new homes (16 applications) currently in the pipeline, compared to just 68 (10 applications) last year. Developers including Galliard Homes, Oakmayne Bespoke and Almacantar have all recently acquired sites/buildings in Soho for conversion to residential use.

Wetherell highlight that the combined benefits of the regeneration of adjacent Regents Street and the new Crossrail Station at Tottenham Court Road have helped to make Soho a perfect location for new residential development. The other development hotspot in the West End is Tyburnia, with 214 new homes (16 applications) currently in the pipeline, compared to 57 new homes (12 applications) last year.

In Marylebone, the number of new homes in the pipeline has fallen, currently 109 homes are in the planning system, down from 140 last year. Wetherell highlight that these figures indicate that the new homes market in Marylebone has matured rapidly, with pioneer developers having already marketed, sold out (at values of up to £3,500 per sqft) and “moved on” to fresh locations such as Soho and Fitzrovia. For investors seeking long-term resi investments, rather than short term “buy and flips”, Wetherell highlight that Mayfair remains the outstanding tried-and-tested location in the West End for long-term residential investment and capital value growth. Residential £ per sqft value growth between 2007 and 2013 has risen by 92% in Mayfair, significantly higher than Soho (76%), Marylebone (63%), Fitzrovia (60%) and Tyburnia (50%).

In order to get a “snapshot” of sales, Wetherell and Dataloft analysed quarterly sales volumes of two bedroom flats across the West End. They found that between May-July 2013 over £88 million worth of two bed apartments sold in the West End; a 23% rise when compared to the equivalent £61 million worth of flats sold between Jan-March 2013 and the £50 million worth sold between May and July 2012.

Wetherell say that these figures appear to indicate a steady pattern of rising sales rates and buyer confidence in London’s West End residential market.

Peter Wetherell, Managing Director of Wetherell comments: “The West End residential property market can be viewed as the beating heart that helps to regulate the entire health of the Londonwide property market. Price growth and confidence ripples outwards from the West End, benefting neighbouring locations such as St Johns Wood, the City of London, Southbank, Vauxhall and Hampstead. The growing strength of the West End residential market is clear and it is a shame that this is now potentially being threatened by political agendas relating to prohibiting change of use from office to residential which would cut off supply. The concerns over overseas purchasers “buying to leave” is misplaced when in most cases overseas buyers are either living in them or buying for rental investment and therefore seeking immediate occupation.”

Peter Wetherell says: “Our latest review of the West End residential market indicates a steady pattern of rising sales rates, growing capital values and sustained buyer and developer confidence. Based on quarterly sales figures, the average price of a two bedroom flat in the West End currently stands at £1.6 million (£1,491 per sqft), up from £1.3 million (£1,373 per sqft) at the start of the year, and up from £1.29 million (£1,241 per sqft) 12 months ago.”

Peter Wetherell continues: “For buyers seeking long term investments Mayfair is the outstanding and tried-and-tested location. Entry prices are higher, but over a long timeframe this district has outperformed all others in the West End for capital value growth. Mayfair is the only West End location where average weekly lettings for a two bedroom flat are above £1,000 per week. For buyers seeking shorter term off plan and “buy-to-flip” opportunities, Soho and Fitzrovia are the addresses to look at. In these two districts, entry values are much lower than elsewhere in the West End, and the new developments markets are far less mature. New projects still at an early stage and there is room for short-term capital value growth, especially when compared with more mature locations such as Marylebone and Mayfair.”