The collapse in house prices has caught up with Sandbanks, one of the most expensive places in the world to live. Two properties, each worth more than £1 million, have been repossessed on the exclusive peninsula in Dorset.

The owners of the two homes, close to the “millionaires' row” of Panorama Road, had failed to keep up with their repayments - confirming that the credit crunch is now affecting even the super-wealthy.

A five-bedroom detached property, 19a Grasmere Road, bought for £1.6 million two years ago by an investment company, is now back on the market for £1.1 million after being repossessed by Clydesdale Bank. Another property on Shore Road, bought in 2001 for £1.08 million, is now worth an estimated £1.87 million. It is understood that the property was owned privately and was used as a third home by its owner.

Robert Dunford, a partner at Tailor Made, the estate agency selling 19a Grasmere, said: “These are the first two repossessions in Sandbanks in 14 or 15 years.”

Neighbouring Panorama Road was once said to be the fourth most expensive part of the world per square foot. Since then, Sandbanks has been a magnet for celebrities and the super-rich, attracted by views across the Channel and the aura of exclusivity that surrounds the peninsula.

The number of repossessions in Britain has jumped 71 per cent in the past three months. A total of 18,900 homeowners lost their properties in the first half of the year.

Although an estimated 95 per cent of homeowners living in Sandbanks buy with cash, some had to take out mortgages to acquire the cachet of exclusivity.

Melanie Bien, director of Savills Private Finance, the mortgage broker, said: “High borrowing is not just the preserve of the poor or those on modest incomes. The wealthy or aspirational have often taken on the biggest mortgages they could get to propel themselves up the ladder and live up to a certain image. However, it can all come crashing down if a job is lost or bonuses vanish, and it can be even more distressing because of the previous perception of wealth.”

Repossessions are expected to rise to 45,000 by the end of the year as the increased cost of borrowing and continuing lack of mortgage finance take their toll on overstretched homeowners, both rich and poor.

Prices in Sandbanks have fallen by an estimated 8 per cent, according to Mr Dunford. However, he said that steep price falls had given business a boost, and cash buyers looking for a bargain were beginning to emerge.

“I have never been so busy,” he said. “In July, we had never been quieter - no one was buying. But then stock markets went crazy and we could see that people were beginning to think that property was safer. Current buyers are looking for 20 to 30 per cent off, but if they have the cash, they might get it.”

Celebrity living by the sea

— Residents of Sandbanks include the Tottenham Hotspur manager Harry Redknapp, pictured, his son Jamie and daughter-in-law Louise, the retired cricketer Geoff Boycott and singer Max Bygraves.

— The top listed price was £8 million for a property in Panorama Road complete with its own mooring. Harbour View mansion has been valued at £10 million and another property at £12 million.

— A 1960s bungalow on a half-acre site sold for £1.6 million last year.

— In 2000 the developer Tom Doyle sold a 1,200 sq ft Sandbanks flat for £1m; only Tokyo, Hong Kong and Belgravia boasted more expensive property.

— The 12 houses along the peninsula's tip are worth a collective £75 million.

— One of the £5 million houses in Sandbanks would fetch about £500,000 in Brighton.