UK Property: The number of people owning second homes in the UK rose by 11 per cent in a year - but cheaper property outside of England is luring any buyers abroad, says Roger Blitz

The second homes market in England is set to slow considerably over the next few years because of steep house price rises in property hotspots and the lure of cheaper deals overseas, according to research.

The number of people owning second homes in 2003-2004 was 229,186, said Savills, the estate agents, who used council tax data gathered by the office of the deputy prime minister.

This amounts to a rise of 11 per cent on the previous year.

Second home hotspots continue to be central London boroughs, such as Westminster and Kensington and Chelsea - favoured by commuters purchasing pieds-à-terre - and the west country for holiday homes.

More than a quarter of City of London properties and 22 per cent in the Isles of Scilly are second homes.

South Hams in Devon, north Cornwall and Westminster have 10 to 11 per cent of their housing stock under second-home ownership.

Other prominent locations for second homes include Berwick-upon-Tweed, north Norfolk, the Lake District, Purbeck in Dorset, Scarborough and the Isle of Wight.

But Richard Donnell of Savills said he expected second home ownership levels to plateau for the next few years.

"This is partly because of the growing property offers overseas.

"You can get something for £100,000 abroad but in this country you are looking at £200,000-plus as a starting figure," Mr Donnell said. "The issue is where you can expect to get your equity from."

The ODPM last year reported an increase of 14 per cent to 177,000 in the number of English households owning second homes abroad, with Spain and France the leading markets.

ODPM provisional estimates for second home ownership in England put the total for 2003-2004 at 295,000, an increase of 15 per cent, but this incorporates second homes purchased purely as an investment.

Growth in the UK is still possible in locations about two hours' drive from London, such as Leicestershire, Derbyshire and Northamptonshire, much more affordable than the south-west or Suffolk coastal areas.

But Mr Donnell added: "Any growth that is seen will be most evident in the major city centres where buyers are increasingly looking to purchase pieds-à-terre as a week-day base, commuting back to their larger home in the country at weekends."

The ODPM is looking increasingly at trends in the second homes market because of concern about affordability levels mainly in city centres but also rural areas where local people have found themselves priced out of the housing market.

A survey commissioned by Savills on the profile of second home owners showed about a third were aged 55 to 64 and more than 40 per cent lived within an hour of their second home.

However, nearly a quarter were prepared to travel more than three hours to get to their second home.