The riverfront Pickering Close blocks will be sold as part of an online auction, but landowner James Tait said he would be sad to see them go after having owned the site for almost four decades.

"It's just a magic place with the birds and the river. I contemplated building my own home there for a while," he said.

But after years of the site sitting vacant, followed by years of planning, Mr Tait said it was now time to let them go.

Given its location at the foreshore, Mr Tait doesn't want to see just anything built there.

He said he was keen to ensure houses built on the eight blocks were not used for short-term accommodation places like those on Airbnb.

And given the site's historic past and the role it played in Warrnambool becoming a major centre, Mr Tait said he wanted to make sure that whatever was built there was appropriate for the area.

Each block is between 670-square metres to 512-square metres, and while some blocks would be limited to two-storey homes, the rest could be as high as nine metres or three storeys.

Mr Tait said the subdivision was designed to be owner-occupied and there would be conditions and design guidelines on what could be built.

"We've got a design committee so the plans will have to be approved by a little team of independent architects and developers," he said.

"I wanted to ensure the outlook from Stanley Street and Viaduct Road was acceptable.

"It's an iconic site.

Mr Tait, who while sad to be letting go of the property, said he was looking forward to seeing the site developed.

Mr Tait has for a long time been keen to preserve the history of the area and its link to the city's maritime past and in the late 1990s spent a lot of time working with the council on its South Warrnambool Village Concept.

"It took a long time to put it into the planning scheme, so long that the school site was sold and other buildings were pulled down so that the village concept is really gone now," he said.

Buyer interest in the tightly held South Warrnambool area, probably fuelled by pandemic lockdowns, has pushed up the price of property in the area.

A one-bedroom house in Elliott Street sold at the weekend for $480,000 at auction, and in July a three-bedroom house sold to a Sydney buyer for $930,000 at an online auction.

Both sold for prices above expectations.

An online auction for the Pickering Close blocks is expected to be held next month.

The blocks are expected to sell from $480,000, Harris and Wood director Matthew Wood said.

"I think they are the best inner city lifestyle blocks in Warrnambool, 35 years in the making," Mr Wood said.

But Mr Tait said getting a good price for his property was not his objective in selling the 7000-square metre site that he purchased in the 1980s for $125,000 all up.

When he bought lot seven in 1984 there was a two-storey house and bungalows on the property which was used as a boarding house, and the neighbouring lot nine which he bought in 1986 had a house on it.

"It had all sorts of other nefarious uses attributed to it," Mr Tait said.

As the houses passed their used-by date, he pulled them down in the late 1990s - and 23 years later it looks set to again have people living there.

Mr Tait said the process to get the subdivision and permit for the site through was lengthy with issues around historical significance, drainage and flood levels having to be addressed.

"I had various proposals put to me for a 24-lot subdivision," Mr Tait said.

"This would have worked but wasn't what I wanted to do."

"I used to pull the leg of South Warrnambool people saying that I was going to build a nine-storey building on it just to get them off my back."

But his vision for the site was a little more modest and the permit for the eight blocks finally came through about four years ago.

Part of that permit process also meant having to dig a number of trenches two metres deep to see if there was anything historically significant on lot seven including any foundations for the historic Bateman's store that used to stand on the site, but there were none.

"They dug criss-cross trenches about two metres down until they got to the groundwater actually and found nothing," he said.

Mr Tait has researched the history of the whole site.

The land was first sold in 1853 as part of the jetty allotments, and its location near the tramline and jetty made it the perfect location to capitalise on the city's early shipping trade.

The site first comprised part of the Warrnambool Steam Flour Mill complex, although the mill itself was located further along Stanley Street.

On Pickering Close itself, lot seven once had a two-storey sandstone building on it called Bateman's Beach Store which was capable of housing 2000 tonnes of goods.

The merchant store was later used by the Western Meat Preserving Company.

In 1910, lots two to five were purchased by Marcus Saultau, a produce merchant and well-known local mayor, state politician and hospital committee member.

He subdivided the land into lots seven, nine, 11 and 13 and then sold lot seven to the Edwards family who the nearby bridge is named after.

The historic Edwards Bridge is set to be replaced later this year with a new structure which is expected to cost about $3 million.

Councillors have flagged plans to erect signage near the new bridge that will pay tribute to the area's historic past.

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