The Dorset resort with Riviera prices

With a stretch of sandy beach, glamorous residents and astronomically priced "super-houses", it is a magnet for the super-rich who want to live by the sea.

Now, the coastal town of Sandbanks, in Dorset, known to locals as "Monte Carlo-by-sea", has been confirmed the most expensive seaside resort in Britain.

The annual Halifax Seaside Town Review, which tracks property prices along Britain's coastline, found that the average price in Sandbanks exceeded £500,000, more akin to prices in exclusive enclaves of Kensington & Chelsea than to a once-humble seaside town on Poole harbour.

The five kilometres of beach comprising Sandbanks boast stunning views and a select number of multimillion-pound properties. The volume of celebrities vying for homes has led to property prices becoming the fourth highest in the world.

A six-bedroom mansion recently sold for £10m and a shabby garage, measuring just 16ft by 12ft, managed to secure twice its asking price at £100,000 after frenzied bidding this month.

The town's lure might have something to do with its celebrity count. The former Liverpool footballer Jamie Rednapp and his wife, Louise, have moved there, as has the footballer Sol Campbell. Jemima Khan and Hugh Grant have been spotted viewing property close by. Portsmouth FC's manager, Harry Redknapp, lives on Panorama Road, which has been dubbed Millionaires' Row.

One practical selling point could be an impeccable record on cleanliness - Sandbanks has flown the European Blue Flag more times than any other British resort, for 17 consecutive years, and was rated among the top five beaches in the country by a recent survey. Experts claim the appeal of a home within easy reach of the beach has sent prices rocketing over the past three years. Tim Crawford, group economist at Halifax, said that when this is combined with a limited number of homes on the market, it suddenly acquires a premium of great magnitude.

"The combination of the beach and harbour location make it very attractive, and when there is a small amount of properties in the area, a limited supply creates a high demand and drives prices up," he said.

Sandbanks boasts ultra-exclusive restaurants and hotels, while nearby Branksome Park, Canford Cliffs and Lilliput are affluent enclaves above Bournemouth's long beach.

The Seaside Town Review found that towns on the west coast of England saw the strongest growth in property prices over the past five years. Nine out of 10 of the most expensive towns were located there, with four in Cornwall, three in Dorset and two in Devon, while the most expensive seaside town elsewhere on the south coast was Lymington in Hampshire.

Welsh seaside towns accounted for nine of the top 20 towns with Pwllheli, in the Llyn Peninsula, at the top of the pile, seeing average house prices rise 176 per cent to £193,379.

Colin Kemp, managing director of Halifax Estate Agents, said the demand from second-home owners had helped to push up prices. Numbers of second-home owners have soared, with some 350,000 people in the UK owning more than one property.

The trend has been led by the rich and famous, who have been buying or renting at resorts from Cornwall to East Anglia.

Lady Annabel Goldsmith recently invested in a seaside house in Bognor for her six grandchildren, while the chef Rick Stein's restaurant in Padstow, Cornwall, has lured the "fashionable set".

The 10 cheapest seaside towns were in northern England, with Withernsea in North Humberside as the most affordable town with the average property costing £94,119.

Average house price in UK's top seaside towns

Sandbanks, £508,337: An oasis of affluence in Dorset, with beautiful beach and celebrity residents making it a "millionaires' playground".

Lymington, £314,378: On the west side of the Solent, Hampshire, it has a thriving yachting centre.

Padstow, £309,374: In Cornwall, it was put on the map after Rick Stein opened seafood eateries there.

Rock, £277,995: In Cornwall, it offers beautiful views and sandy beaches dotted with rock pools.

Budleigh Salterton, £277,673: In Devon, at the mouth of River Otter, it has a pretty pebble beach.

Fowey, £275,565: The historic port offers a walk called "The Saints' Way" from Fowey to Padstow.

Lyme Regis, £264,662: In Dorset, the seaside resort was awarded World Heritage Site status.

Sidmouth, £263,251: The beach in Devon, known as "Jacob's Ladder", is backed by stunning red cliffs.

St Mawes, £250,501: A town with a harbour looking out on to the Carrick Roads estuaryboasting excellent views of the coast.

Swanage, £248,622: in Dorset, has become a hot tourist resort with a "Jurassic coastline".