Ray White Rural Timboon director Gerard Delaney said regional areas had become more popular in recent years.

"However, 2020 saw a sharp rise in median home values locally," he said.

"Cobden has also experienced strong growth in median values of 14.2 per cent in 2020 and 27.7 percent for 2021.

"Coastal centres such as Peterborough and Port Campbell continue to be popular with a median value of $625,000 an 18.9 per cent increase on the back of a 25.5 per cent increase the year prior in Peterborough.

"Port Campbell has also been popular with the 2021 median finishing at $628,000, up 20 per cent."

Mr Delaney said demand for properties in the south-west had increased.

"There have been a number of factors," he said.

"The ability for many to work from home is often discussed. First home owner government stimulus, favourable bank lender parameters and historically low interest rates, the lack of rental availability relating to recent changes to the residential tenancies act and facilities that are available locally are all contributing. The local walking trails have been very popular."

Mr Delaney said listings were being snapped up at record rates.

"Days on market have been historically low - many selling within a week, some within a day," he said.

Mr Delaney said the ability to buy a bigger home or property was appealing to city buyers.

"I was recently quoted - 'I never realised how close I was living to my neighbour in Melbourne'," he said.

Colac to Coast Real Estate agent Andrea Ivermee said inquiries from people wanting to buy in Timboon had also increased.

She said prior to the coronavirus pandemic, Melbourne buyers wanted to purchase property within two hours from the city.

"We are seeing a much bigger push from buyers who are looking for something further away," Mrs Ivermee said.

She said Timboon had a number of popular natural attractions and was part of the Gourmet Trail map.

"Timboon is on the radar for buyers," she said.

Data from CoreLogic shows Timboon had the second highest annual value change across the state.

The median value increased by 46.7 per to $504,941.

Cobden ranked third, with its median price increasing by 40.9 per cent to $398,062.

Mrs Ivermee said people were seeing the value in investing in a property in Cobden.

"Cobden has the added support of industry workers, with the Fonterra factory," she said.

Mrs Ivermee said people could buy a property, renovate it and put it on the rental market.

She said there was high demand for rental properties across the south-west.

Cobden Business Network business and economic development consultant Laura Hultgren said lack of available housing in the town was an issue for some business owners.

She said there were a number of businesses who were looking for staff, but some applicants were finding it hard to secure accommodation.

Miss Hultgren said she discovered there were limited options when she moved to the town less than a year ago.

"COVID has had an impact, with people choosing to relocate to regional areas," she said.

"Whilst it's great news for home owners, with the increase in house prices and shortage of housing available in Cobden, there are families who are unable to find affordable housing in Cobden or the region."

Meanwhile, the median value of homes in Port Fairy increased to $1.029 million.

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