The two-bedroom Patricia Street cottage sold for $584,000 to a Warrnambool couple after more than 45 bids.

The hotly contested auction had six bidders, four from regional Victoria and two phone bidders from Melbourne.

Bids started at the property's $400,000 reserve price and increased in $20,000, $10,000 and smaller increments until narrowly rising in $1000 bids.

"A young Warrnambool family purchased it, they were exceedingly happy and they chased it right down to the finish," Brian O'Halloran & Co's Brian Hanock said.

"The situation where it is close to the Granny's Grave track, close the esplanade and the beach; that was a big telling factor."

Mr Hancock said both parties were pleased with the result. He said given Warrnambool's tight housing market he wished there were more properties on the market like it.

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