It's not a houseboat. It's a floating apartment

Forget the pied-à-terre in Kensington, the loft in Clerkenwell or the country pile in Gloucestershire - the latest place to buy a luxury home is on the water. According to British Waterways, residential moorings on canals have more than doubled over the past four years. In London alone, there are more than 500 people on the British Waterways waiting list for a berth. It takes several years to get a mooring in some parts of the country.

Estate agents report an increase in demand for houseboats as many people follow celebrities such as Damien Hirst and the singer Nick Cave into life afloat.

The number of houseboats moored in Britain now stands at an estimated 24,000 - a 66 per cent increase over the past two decades. But it is since 2000 that their popularity has really taken off.

The trend has been driven in part by £28m of investment into England's canal network over recent years, but also by a growing realisation that houseboats can offer more living space for less cost - particularly in central London and other large cities.

A top-of-the-range two-bedroom houseboat with a mooring at Chelsea, for example, will cost around £250,000. A similar sized flat in the same location would cost roughly three times that.

The chief executive of the National Association of Estate Agents, Peter Bolton King, said his organisation had noticed a marked rise in prospective buyers choosing houseboats over homes on dry land. "The demand for houseboat living in central London has certainly increased in the last couple of years, and in general this is a lifestyle, not financial choice," he said.

But the new breed of houseboat dwellers, it appears, are not willing to sacrifice the luxury they have become accustomed to when they move on to the water. So great is demand at the top end of the market, that one company has begun building a streamlined "executive" version of the traditional houseboat - "the floating apartment". Designed by London-based Waterspace Plc, the state-of-the-art three bedroom boat is aimed at those who "traditionally would not think of living on water", but have money to spend. Complete with entertainment areas, air conditioning and internet access, the £300,000 vessels come "with all the facilities of a land-based flat".

One high-profile fan of life aboard the houseboat is actor Nigel Planer, best known for his role as Neil in the cult 1980s sit-com The Young Ones.

Mr Planer, 50, lived aboard a large boat on the Thames, moored near Battersea Bridge, for six years. "It was a real treat to live on the boat," he said. "We lived on an old Thames lighter barge, and it was enormous. We had three bedrooms, two bathrooms, two sitting rooms, a breakfast room and a kitchen. It was beautiful - the views, the creaking and the rocking - I'd highly recommend it.

"There was a real sense of space even though we were living right in the middle of London. It was a different view out of the window every day - there was a 14ft difference between high and low tide. It was expensive, but nowhere near as much as the cost of buying a property that size in that part of London."

Pat Ridel, a 56-year-old writer from New York, is currently enjoying life aboard a luxury houseboat a little further down the Thames at Chiswick in west London. Ms Ridel moved on to her £350,000 boat, off Chiswick Pier, three years ago.

"It's a decision I have never once regretted," said Ms Ridel, whose four-bedroom boat is equipped with every modern appliance, including televisions, a washing machine, microwave, computer and central heating.

"It's a common misconception that houseboat living has to be uncomfortable," said Ms Ridel. "People think it will be cold and damp, but they're amazed. This is the warmest bathroom I've ever had in Britain."

Ms Ridel recently had her boat valued, and was surprised to find its worth had increased by more than a third in the three years since she bought it. It has prompted her to cash in on the boom. "The boat-broker who valued it says they are constantly being surprised by the demand for nice boats and the high prices they fetch," she said.