Things are hotting up in Chile

Looking through the tall bay windows, my view tumbles over a jumble of chaotic rooftops and bristling palm trees, before spilling into the silky blue Pacific Ocean.

Surrounded by pieces of maritime memorabilia, I easily imagine myself on one of the great ships that once docked in Chilean seaside city Valparaiso. The ability to set sail while staying on terra firma was, after all, one of the many reasons why Nobel Prize-winning poet Pablo Neruda chose to have a home here in the 1960s.

Filled with an eclectic mix of gaudy antiques and bric-a-brac so bizarre it can't fail to raise a smile, the contents of La Sebastiana, a four-storey house wedged into one of Valparaiso's 45 hills, aptly reflects the life of Chile's maverick literary great.

A dusty, retired carousel horse hovers in a semi-circular room as if ready to perform revolutions; an embalmed Venezuelan flamingo dangles from the ceiling; and on a table sits a large ceramic cow used by the party-loving host as a punch bowl when entertaining guests. On the walls, paintings of a man and woman in identical Edwardian ruffs hang opposite each other, strategically placed by Neruda so "they wouldn't get lonely".

These flurries of flamboyance resonate perfectly with Valparaiso, Chile's bohemian open-air art gallery and a magnet for artists, writers and creative types.

During the late 19th century boom in maritime trading, this now laidback coastal city enjoyed a former life as one of the most important ports in South America. All that changed though in 1914 when the Panama Canal opened up an alternative trade route, and 100 years later the UNESCO World Heritage site, still linked by well worn, trundling funiculars, attracts a very different sort of traveller.

I climb the steep cobbled streets to tourist-friendly districts Cerro Alegre and Cerro Concepcion. Houses in sunshine yellows, pastel pinks and burning reds are stacked into the sky, their walls often decorated with daring murals - varying from the politically subversive, to the strikingly cool.

Despite ongoing seismic activity in this area, several aristocratic mansions built in the 1920s are still standing and have been transformed into boutique hotels. I stay at Casa Higueras, with heavy wood-panelled rooms echoing past glories, and a bay view from the Montealegre restaurant that would certainly have pleased Pablo Neruda.

Hanging out in bars and dining spaces is a way of life in Valparaiso - not only for the culinary pleasures afforded, but also the chance encounters. The owner of nearby Cafe del Pintor tells me about a young French girl who sat down at a table next to a blank white wall and immediately identified it as a canvas for her next mural. The space is now covered with bicycles, birds and steam ships spiralling from a bearded man's pipe; her interpretation of the dream-like town.

Like Pablo Neruda, many artists seek escapism in Valparaiso, but the free and easy aesthetics also seem to be filtering through to nearby capital Santiago, a two-hour drive away.

This is where Neruda spent a great deal of his time, at La Chascona, a house built in honour of his lover Matilde Urrutia. Since the poet's death in 1973 and the subsequent rise and fall of notorious dictator Pinochet, the city has drastically changed.

Standing beneath a puzzling display of spray paint, dismembered toy dolls and battered trainers, in a backstreet of the trendy Barrio Lastarria, I can only imagine Neruda would have smiled wryly and approved of this modern work of street art.

Due to subsequent earthquakes, many of Santiago's historical buildings have been destroyed over time; the cathedral in Plaza de Armas is already in its fifth incarnation. Skyscrapers tower almost as high as the snow-capped peaks, showcasing a modern city that's withstood the test of seismic shifts - both physically and politically.

Few people bring up Pinochet in conversation, but many vestiges from his oppressive reign of terror, which lasted until 1990, can still be found. A former torture centre at Londres 38 in downtown now functions as a memorial to the 40,000 people who disappeared during his regime, while dive bar La Piojera, once popular with dissidents, is still open for business.

I call into the raucous drinking hole, and after declining house speciality the Terremoto (meaning earthquake) - a shocking pink concoction of white wine and Fernet, topped with a dollop of pineapple ice cream - I head for what I mistakenly assume to be a more sober coffee at Cafe Caribe on Paseo Ahumada.

Curvy waitresses in low-cut micro-minis parade up and down a raised catwalk in the mirror-lined room, serving coffees accompanied by more than just one lump or two. Known as cafe con piernas (coffee with legs), venues such as this were championed by businessmen in the 1970s, fed up with the conservative political regime.

Thankfully, the dress code is not so minimal in Borago, a wildly creative restaurant that currently rates eighth in Latin America's 50 Best Restaurants list. Here, Chef Rodolfo Guzman and his team prepare dishes with ingredients foraged from the entire 4,300km length of Chile.

Highlights of a mammoth tasting menu include a Pisco Sour made with mora berries from Patagonia, and a squid ink cracker topped with goat's cheese, floating on pureed samphire. Quite fittingly, the dish is named Cremosa de Isla Negra, a coastal town south of Valparaiso, christened by Pablo Neruda, who owned a third residence here.

"The Pacific Ocean overflowed the map," he once said of his front room vista. "There was no place to put it. It was so big, unruly and blue that it fitted nowhere. That's why they left it in front of my window."

I don't have time to visit what many deem to be his favourite home, but biting into my dish, I have a good indication of Isla Negra's appeal.

• Sarah Marshall was a guest of HighLives Travel.