The house - with a classic facade and rear laneway access, but no walls or floors - went up for auction on Saturday morning, attracting a curious crowd and three serious bidders, two of whom went head to head towards the end.

Auctioneer Allister Morrison, from Ballarat Real Estate, said it was a sign of how furious the market had become as Melbourne's exodus to the regions continues.

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"It shows that people are happy with everything from a fully renovated house to actually doing something from pure scratch, because this one is gutted inside," he said afterwards.

"The fundamentals are the location, people just want to be in central Ballarat, they're looking for opportunities to add value."

Mr Morrison added it was a "seller's market" at the moment, with a lack of stock across the city.

This was causing some frustration among buyers, who are forced to do their homework and act quickly.

"They can't keep track of where the prices are at, they're moving so rapidly," he said.

"Their view of what it should be and the actuality of what it ends up being, there's a bit of a gap, so buyers are a little frustrated because the market's moving so fast, and when they're in a situation to buy, and particularly in a private sale, they're always up against multiple buyers - it's fast and furious, and hard to keep track of."

That's echoed by the Real Estate Institute of Victoria's Leah Calnan, who said to expect more auctions in Ballarat in future.

"In such a competitive market, for vendors it makes sense for them to conduct an auction campaign for them to achieve the best price," she said.

"There's far more buyer activity than supplier activity, and we're not seeing any signs of a housing bubble - what it's demonstrating is that COVID has changed the way we look at property and buy property."

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Mr Morrison added even his offices in Maryborough and Ararat were "flying".

"All the various web portals are reporting huge traffic to regional properties," he said.

"The market's that tight due to stock, and that's having a real impact on prices.

"There's a real shortage of rentals too because people are picking up those investment properties and either they used to be rented out, and now they're going to owner-occupiers, so it's affecting buyers and renters.

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"I think it's like a perfect storm, there's the low interest rate environment so buying's never been more affordable, and banks are reasonably accessible for borrowing as well, they're happy to lend at really affordable rates, it could be that way for a little while."

Ms Calnan concurred, noting there are no signs of demand slowly.

"It will put added pressure to affordable housing in towns like Ballarat, and pressure on the public transport system, and ultimately put added pressure on infrastructure, health, and education," she cautioned.

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"Local, state, and federal governments need to be thinking about how they develop regional towns, not just for the coming 12 months or two years, but for the 20 year period.

"There's all this new talent moving to places like Ballarat while still having a metropolitan work life - look at what new employment industries and opportunities they can bring to the town to support locals, and what will potentially be a new generation of regional people.

"There needs to be a balance - we know people are moving, they're trying before they buy, we knew before COVID at the start of last year, Ballarat's vacancy rate was under 1 per cent, so there has to be support across all sectors and cohorts."

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