The city's red-hot market may have cooled but real estate agents say the wave of interest has flowed onto previously "undervalued" nearby shires.

Latest data from the Real Estate Institute of Victoria shows Corangamite Shire saw a 300 per cent increase in monthly auction sales from January (three) to May (12). It was the only south-west local government area to see a notable increase.

The length of time it took for a private listing to sell in Terang decreased by six days in one month from 43 in April to 37 in May while the average length of time increased or remained the same in most other LGAs.

Falk & Co director David Falk said it was "finally" time other shires were receiving due recognition.

"Finally people have worked it out and found out how good our farming land is," Mr Falk said.

"For years I've been saying to people 'you don't realise it's so cheap' and it's finally come to life.

"It wasn't that long ago when we were selling land for $3000 to $4000 an acre, now it's between $10,000 to $12,000.

"We've been undervalued but now it's time - people have realised how good it is."

He said he'd received widespread interest in the shire's property offerings.

"People have finally worked out it really is a lovely place to be and a good place to invest," Mr Falk said.

"I've even had some people from Sydney buy a property at Elingamite."

Charles Stewart real estate agent Brian Rowbottom said a recent property listed in Camperdown had attracted record interest from out-of-towners.

"I had a property the other day where within three weeks I had 23 people inspect it," he said.

"I had about 30 inquiries too which is huge - I've never had that much interest in a place before and those people ranged from Ballarat, Geelong, Melbourne and locally as well."

He said while the high level of interest was positive, it meant younger people were being priced out of the market.

"It's getting harder for the younger ones to buy into the area because of all the outside activity," Mr Rowbottom said.

"Camperdown is virtually land-locked, we don't have any new building areas so for us to progress as a town we need more blocks of land we can build on."

Corangamite Shire mayor Ruth Gstrein said the council was working to fast-track the re-zoning of land including in Cobden where the median price of a house grew by 27.7 per cent in 2021.

"We're doing the Cobden Structure Plan at the moment so that includes identifying potential residential land," she said.

"Normally re-zoning could take 18 months and cost $150,000 to $200,000. It can be a long and onerous job."

She said subdivision was a council priority.

"We had a residential land review last year around Camperdown and Terang, looking at subdivisions," Cr Gstrein said.

"The thing about Camperdown is it has a lot of land which hasn't been re-zoned as residential.

"To set up a block of land in Camperdown versus Caroline Springs, for example, would probably cost you the same, but your return would be about three times that of Caroline Springs.

"So there's a number of portions of land we've identified and we've been in discussions with the owners of the land to find out what their thoughts are."

Southern Grampians Shire mayor Bruach Colliton said a surge in new residents and businesses meant the council was also racing to free-up land for housing.

"It's a time of growth which has been a long time coming - I've always appreciated and understood how valuable it is here and how much opportunity there is. People are starting to realise and capitalise on some of that," he said.

"COVID-19 has been a great blessing for us in one respect in that a lot of people are moving to regional Victoria and discovering how good it is in Hamilton and the Southern Grampians in terms of what we have access to with facilities, the natural landscapes around that we can all visit and appreciate every day and the opportunities to start businesses.

"We'll be finishing off the Hamilton Business Park as well which is an industrial precinct helping other businesses which want to come out here and relocate - we're starting to see more of that.

"There's lower costs here, lower overheads to setup businesses so we're seeing more interest in relocating businesses and larger sized ones here as well."

He said the council prioritised finding land for key workers to facilitate the rapid expansion and the Small Town Strategy - a main feature of its 2022-23 budget - accounted for that.

"We're doing some more small-town strategies, so we're doing some work around land use for our small towns because we know we need more housing," Cr Colliton said.

"We're looking at where we can potentially free-up some space around our small towns for more housing. The good news is Wannon Water has partnered with us for this budget to do a hybrid sewer project in Penshurst which will also free-up land for development there.

"There's land in Penshurst but you can't build on it necessarily because you need the septic and the block might be too small but now we're going to see those blocks can be built on.

"Then we have the Lake's Edge Housing Development which is land council owns and we'll see that finalised this financial year which will see another 200 to 300 lots come on the market.

"It's all happening."

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He said there was also potential options for land in smaller outlying towns.

"Penshurst is great because we got funding from Wannon Water for the hybrid sewer system, but we've got some other smaller towns like Coleraine and Cavendish where there's potential for some other lots around town," Cr Colliton said.

"Some of those lots we probably won't see this financial year but the detailed work will be done so if we have to re-zone then we'll have the evidence we need to put in a planning scheme amendment and work with the state to free-up some land."

He said the recent budget reflected a renewed focus and commitment to growth in those outlying towns. About $30 million of the council's $78 million total expenditure is expected to go to infrastructure upgrades.

"We actually had a new residents' function here this week with 85 people, I met with some of the new residents and they'd moved to Coleraine and Cavendish," he said.

"In towns like Penshurst, Dunkeld, Coleraine and Cavendish people are really making the tree-changes.

"You can see the prices have just gone up and so we're really trying to invest in the infrastructure where we can to help facilitate that growth.

"Towns like Penshurst and Coleraine have the infrastructure communities need to grow and there's a heck of a lot of empty shops in them and we're starting to see them fill as well so people can start new businesses.

"The opportunities here are almost endless. What could happen in the next 10 years, to see some of these smaller towns come to life and then Hamilton to continue to catalyse and be renewed as well. It's a great time."

Cr Colliton said for now, an $8 million investment in Melville Oval would help meet the recreational needs of new families. "We need to invest in these recreation facilities because there's more people here, some of our sporting teams are multiplying because they're filling up which is fantastic."

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