The median price for a house sits at $370,000 compared to about $330,000 less than two years ago.

"We're seeing a very confident market place for the first time in a long time," Mr Torpy said.

The strong demand for properties has resulted in higher prices achieved and less time on the market.

Data released by the Real Estate Institute of Victoria reveals homes stayed on the market for an average of 43 days in January this year compared to 64 days in 2019.

Mr Torpy said the flurry of interest was evident with each and every listing, with most attracting multiple inquiries.

"If you go back 18 months ago, in a two month period you might see 10 to 15 people look through a property - now you might see that number inside a two week period," he said.

Mr Torpy said the strong interest in properties in the city was good news for people looking to sell. He said two auctions last weekend were fiercely contested, with a property at Peterborough sold under the hammer after 30 bids were submitted by four bidders, while a property at Allansford attracted 70 bids.

Mr Torpy said a number of properties had achieved high prices recently, with one achieving almost $100,000 over its reserve. He said there were a high number of people looking to move to Warrnambool for a range of different reasons.

He said the housing shortage meant some people had to consider looking outside of Warrnambool or compromising on the type of property they wanted. On Saturday, a three-bedroom home on Merrivale Drive will be auctioned.

Mr Torpy said he believed the auction would attract a large crowd. The shortage is good news for sellers, but bad news for buyers and people looking for a property to rent, with vacancy levels at just 1.2 per cent.

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