SPAIN and France remain the most popular choices for Britons buying holiday homes aboard.

They still account for 34 per cent and 23 per cent of the total 425,000 UK-owned second homes abroad.

A survey by estate agent Savills, in association with holiday-rentals.co.uk, predicts that during 2008 British owners will spend a further £5.2bn on holiday homes abroad, to make a total of £58bn.

Property prices in Spain ‘turned negative’ during 2007, but Savills Research says buyers still like it as 'the ideal holiday location'.

Elsewhere, a lucky minority of buyers enjoyed a fast return on their investment.

"Higher levels of capital appreciation were recorded in Eastern European countries with cities including Sofia and Warsaw seeing over 20 percent price growth," the survey reports.

One factor still driving demand is lower prices abroad. Savills Research indicates the average property price for all UK overseas second homes is £135,000, "This is one of the key reasons why UK investment abroad is so strong amongst older homeowners," the report said.

"Retirement was the major motivation for acquiring overseas property for 18 per cent of respondents included in our survey.

"These owners tend not to require mortgage finance, and their motivation for renting out their property is to contribute towards the cost of maintenance and to avoid it standing empty."

'Fly to let' investors have capitalised on the growth in city break tourism by investing in cities including New York, Barcelona and Paris, with Eastern European destinations fast improving in popularity including Prague, Krakow and Budapest.

During 2007 nearly 60 per cent of homes purchased abroad by Britons cost less than £200,000; some 28 per cent cost between £100,000 and £150,000, the survey reveals.

Results also show that despite growing awareness of climate change overseas, home buyers are actually looking further afield to buy in locations such as Dubai, the Far East and the Caribbean.

"Investing in overseas property, both for leisure and investment purposes, remains a key aspiration for many Britons," said Greg Grant, managing director of holiday-rentals.co.uk