A three-bedroom home in north Warrnambool increased in value by $64,000 in one year.
The MacLand Drive property was snapped up at auction on the weekend for $429,000 after it was bought for $365,000 in October last year.
Ray White Real Estate Warrnambool partner Fergus Torpy said there was strong interest in the property.
He said he expected the competition for properties, which were in short supply, would increase once travel restrictions were eased in Melbourne.
"It's the strongest market I've seen," Mr Torpy said.
"We're seeing confidence in all price brackets at the moment."
Mr Torpy said there had been a significant rise in house prices in Warrnambool in the past decade.
He said the city's infrastructure made it an attractive prospect for buyers, while more recently an increasing number of people were considering moving away from metropolitan areas due to the coronavirus pandemic.
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