James Nicol, from Ballarat agency Biggin Scott, is skeptical Melbourne is in a bubble itself.

“(In) Melbourne, supply isn’t outstripping demand,” Mr Nicol said.

Mr Nicol said while buyers in Ballarat and Melbourne were on the hunt for similar homes, the sales results in Ballarat did not hint at a bubble spreading.

“While there have been some outstanding results in and around Ballarat, there’s nothing that indicates that if you’re selling a house at $400,000 you’re going to sell tomorrow for $700,000,” he said.

Director of sales at PRD Nationwide Brenden Barclay said the Ballarat market was resistant to large peaks and troughs as 70 to 80 per cent of Ballarat homes were bought by Ballarat buyers.

“(Ballarat buyers) will pay a good price, but they help to keep our market steady while still having good growth,” Mr Barclay said.

This comes in the wake of a submission from economists Lindsay David and Philip Soos to the parliamentary inquiry into home ownership, saying Melbourne is in the midst of a housing bubble which when burst will cause a “bloodbath.”

A bubble can occur in the real estate market when demand for housing in an area drives prices up at a rate dramatically above wider economic growth.

Melbourne has seen an auction clearance rate of 79 per cent over the past two weekends, above the 72 per cent rate this time last year, which has seen the median house price for inner Melbourne climb over $1 million.

Former Kew resident Barbara Berndt took advantage of the price difference this February when she purchased a four bedroom property on Victoria Street.

Ms Berndt said for a similar property in Melbourne she would have paid over $1.2 million and over $2 million in Kew.

“In Melbourne it would be worth more than double” Ms Berndt said.

“You look around and you think what is affordable and what is good value as well.”

Ms Bernt, who works from home as a finance broker, she still drives to Melbourne three times a week.

Ballarat’s median house price of $310,000 makes it a more affordable option than Bendigo and Geelong, with the two recording median house prices of $335,000 and $410,000 respectively for the March quarter. 

Of the three, Ballarat recorded the strongest growth in the last quarter, with a 3.3 per-cent increase on the December quarter, compared to 1.5 per-cent for Bendigo and -1.2 per-cent for Geelong.