THE luxury homes of Sandbanks have seen the area crowned Britain's most expensive seaside town for the third year in a row - despite average house prices there having dipped by nearly £37,500 over the past year.

Home buyers in the glamorous location of Poole face paying £626,553 on average, according to Halifax's annual seaside town review, which tracks house price movements in 193 seaside towns across Britain.

But the report suggested stamp duty costs may have helped to put the brakes on house price growth in some of the country's most desirable coastal areas.

A stamp duty price hike was introduced for second homes in 2016.

Despite holding onto the top spot, the average house price in Sandbanks has dipped by £37,494 compared with a year earlier.

Britain's second priciest seaside town, Salcombe in Devon also experienced a house price dip.

Sandbanks is joined in the top ten by Lyme Regis in West Dorset and Lymington in the New Forest.

Home buyers searching for a coastal retreat where their cash may go further may want to consider Millport in Scotland, which was identified as Britain's least expensive seaside town with an average house price tag of £81,233.

Millport gets 26 hours of sunshine a week on average, compared with 33 hours typically in Sandbanks, according to the report, which used figures from the Land Registry, Registers of Scotland and the Met Office.

Russell Galley, Halifax managing director, said: "It's no surprise that the south coast continues to be home to the most expensive seaside towns in the country, including those with the greatest growth in house prices over the last 10 years.

"What we can see though is that the two most desirable locations have in fact seen prices drop over the last year.

"This fall is likely to have been impacted by the higher costs of stamp duty for these more expensive homes."

The most expensive seaside towns in Britain, according to Halifax, with the average house price are:

1. Sandbanks, £626,553

2. Salcombe, Devon, £577,591

3. Aldeburgh, Suffolk, £535,872

4. Lymington, £487,143

5. Padstow, Cornwall, £435,833

6. Dartmouth, Devon, £431,539

7. East Wittering, Sussex, £414,005

8. Fowey, Cornwall, £403,622

9. Lyme Regis, Dorset, £397,584

10. Budleigh Salterton, Devon, £396,034