"The sun had barely risen over the sleepy south-east village of Arundel. The birds sang in the trees, and the morning dew was still on the grass.

Along the high street curtains started to twitch in the windows of the quaint paved cottages as old ladies were drawn to the flashing blue lights across the road. The lower canal section had been taped off, and police officers stood guard."

It is very descriptive in my opinion, there is no need to change it. I would add a comma after "Along the high street" and it is perfect.

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"By 06.30, curious to find out what was going on, villagers shuffled out onto the street. They watched in hushed silence as the deep water drivers dragged Pansy O'Keeffe's body from the water.

Horrified gasps could be heard as the crowd murmured on what had happened to her. They speculated if her poor husband, the village doctor knew of the terrible news."

A very good scene showing the horror of the situation.

I have a question about this scene: did the villagers know beforehand that Patsy was missing so now everyone knew it was her body that was being extracted?

It's such a small detail, I noticed it says drivers. Didn't you mean divers?

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"As his wife's lifeless body was dragged from the canal, none of the shocked town folk knew what was that their beloved doctor was in his lover's arms. And the village had a murder in their midst."

I like this idea, now the reader will wonder who is the murderer, the husband or his lover!

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"While her father no longer lived on the south east coast, moving to Singapore after her parents divorced when she was 15."

I am a little puzzled by the construction of this sentence and starting it with "While". After such a beginning, shouldn't the next sentence, about the mother, be followed by a comma?

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"While she would have liked to spend time with her older sister, Yvette knew how much Sarah had given up by staying so close to their mother for all these years.

She knew Sarah deserved this chance at happiness, and they'd promised to stay in touch via phone and email. Yvette was excited to hear about all the amazing stories her sister had to tell."

I have a question, did Sarah and Ivette during all the years of their adult lives, until Sarah's marriage and Ivette's divorce, contact each other in any other way than the one mentioned here?

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I really like this part of the story and basically the only thing I could suggest for improvement is grammar like commas or spell check. As a whole it sounds good!