The median price of properties in Terang has risen by more than $120,000 in two years, new data shows.
Agent Luke Williams said there was huge demand for property across the south-west, but particularly in towns on the Princes Highway including Terang and Camperdown.
He said homes were selling at a faster rate than ever before in the south-west and about 20 properties were sold to buyers who had not inspected the property in 2020.
"It's extraordinary," Mr Williams said.
"Some of the properties we've sold are nearly comparable to homes in Warrnambool in terms of price."
Mr Williams said he believed demand would increase when COVID-19 restrictions eased and people from metropolitan areas were able to complete in-person inspections.
He said he believed the surge in popularity was due to an exit from cities due to the pandemic, low interest rates and the facilities available in the small towns.
"They've got the facilities you need so that you don't have to leave the town," Mr Williams said.
Timboon is another town experiencing a property boom.
Ray White Rural Timboon agent Gerard Delaney said three years ago the median price for properties increased by 50 per cent, followed by a 25 per cent increase the next year and a 22 per cent increase in 2020.
"Timboon is a hotspot," Mr Delaney said.
"The residential market is very strong."
Mr Delaney said it was an attractive option because of the facilities it offered, its picturesque walking trails and welcoming residents.
He said six lifestyle blocks recently sold in four hours, with buyers rushing to snap up the land.
Mr Delaney said there would be another 24 blocks of land available in a subdivision in the next six months.
He said he expected there to be a high level of interest in these.
"There are a lot of different things happening," Mr Delaney said.
"It's not just city buyers. Local buyers are making the most of historically low interest rates," he said.
Property in Port Campbell is also attracting significant interest.
Mr Delaney said the phone had not stopped ringing with inquiries about a property consisting of land and two three-bedroom dwellings.
The combined allotments cover 2026-square-metres of land and boasts a three-bedroom home and a three-bedroom apartment.
Mr Delaney said the site would suit a number of buyers, including someone interested in providing accommodation.
Rural land across the south-west is also in high demand, according to Mr Delaney.
A 214-acre dairy farm at Nirranda recently attracted 48 bids at auction, with a price of $10,650 per acre achieved.
"Prices have certainly gone up significantly, especially in the last six months," Mr Delaney said.
He said there was interest from a number of states, including Tasmania.
A 479-acre grazing farm at Bessibelle owned by the same family for six generations is also attracting a lot of interest.
It will go to auction on October 29.
Moyne Shire councillor Jim Doukas said there was similar interest in Mailors Flat, with most blocks in a subdivision sold, and Grassmere.
"My understanding is 95 per cent of the blocks in the Mailors Flat subdivision are sold," he said.
Cr Doukas said buyers were desperate to secure lifestyle blocks and he hoped the council's rural housing and settlement strategy would address the shortage of these allotments.
"I think the community is crying out for small rural properties," Cr Doukas said.
"The one to five acre properties are very popular."
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