They're referred to as tankless or in-line water heaters in the US.
Whole house (i.e. tank) water heaters generally do have to go in a separate space because of their size. Sizes vary, but household models are usually in the 20-60 gallon range, depending on household needs. 40-50 gallon models are the sizes commonly stocked in hardware stores. They have to sit directly on the floor due to their size and the combined weight of that much water. In-line heaters (aka gysers) can be mounted on a wall or occasionally under/inside a cabinet if they're electric. Gas models require a wall-mount due to size and need for air-flow.
Also, at least in the US, the hot water tank is plumbed directly into your pressurized water line which runs between 30-80 psi, so no need for the gravity assist.. The tankless versions are uncommon in most of the US.
Back to the original question - are you asking if it's possible(or perhaps permitted), or advisable? If you just want to know about the feasibility or are asking permission, then the corrected version emsr suggested is the one to use.
If you're asking for recommendations or opinions about whether or not to do it, then substitute 'should' in for 'can'.