PRP Warrnambool valuer Les Speed said Warrnambool had been "under sold for a very long time".

"If you look at Warrnambool in comparison to Port Fairy, Warrnambool has all the facilities and amenities - great schools and that coastal environment but residential prices are significantly higher in Port Fairy," he said.

"Port Fairy does have that tourism township but I think over the years Warrnambool has been undersold and the property value levels haven't been where we've thought as an industry they should be.

"I think this surge has brought Warrnambool up to where it should be."

He said it was impossible to say how long the boom would last.

Mr Speed said the value of properties in lower-priced areas of the city had jumped significantly in recent months.

"That classic ex-commission, brick, three-bedroom home was previously fetching for $220,000 max, while a similar property in a different area was fetching $320,000, but that gap has narrowed significantly," he said.

"People used to think 'I wouldn't buy there' but now they're saying 'I can afford to buy there'."

Mr Speed recalled real estate agents struggling to sell old brick veneer properties in north Warrnambool 30 years ago but said they were now flying out the door.

"People used to look at those 30 to 40-year-old properties that were selling for $320,000 and they preferred to get a brand new build for $350,000," he said.

"But now because of the demand, new builds are behind 12 to 18 months and that market is now sliding down to the established and those homes that might have been harder to move are now selling well."

Mr Speed said it was a great time for home owners to sell, as long as they planned to buy in a different market.

"If there's a 30-year-old property in Whites Road that you paid $350,000 for 10 years ago and you now sell it for $500,000, you've got a great windfall there, but unfortunately that essentially only buys you what you just sold," he said.

"That's the difficulty if you're selling in Warrnambool. If you're moving out to Terang or Camperdown, or other smaller environments, you'll get that windfall but you won't if you're buying and selling in the same market."

Mr Speed said low interest rates, housing demand and a general exodus from places such as Melbourne and Geelong had led to the jump in prices.

Mr Speed, who has been in the housing industry for more than three decades, said he conducted valuations in recent months on properties that were later sold "absolutely well and truly above those estimated figures".

"Agents are saying they're getting 10 to 15 inquiries in the first week of people looking for a property that is in that bracket of $500,000 or less and they're being asked to put their very best offer in," he said.

"If you go back in history, the best offer was still below the asking price but what is happening now is purchasers are looking around the property market for 12 months and if their offers are constantly knocked back, they'll start putting ones in that are above the asking price."

Mr Speed said it was a great result for vendors but not so much for young, first home buyers.

"There's always a positive and negative flow-on-effect. It's great that Warrnambool is booming but it's only good if you own a home, it's a lot harder being in a situation if you're trying to get established in the market," he said.

"For most agents here, it also means there is a lack of stock whereas you don't have to go back too far for them to say they're struggling with a lack of purchasers."

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