According to data from Real Estate Institute of Victoria, the median house price in regional Victoria grew 27.0 per cent in 2021, reaching a record-breaking $565,000.

Units and apartments in regional Victoria also grew, achieving an annual growth of 19.6 per cent, bringing the median price to $395,950.

Among the towns with the biggest surges in house prices in 2021 were Horsham in the state's Wimmera region at 54.1 per cent, Yarrawonga on the NSW-Victorian border 40.3 per cent, and Ararat in the south west and Wonthaggi in the south east, both recorded 36.7 per cent increases.

REIV President Adam Docking said the ballooning prices reflected the attraction of regional Victoria as a lifestyle choice following two years of COVID-19 restrictions.

Surpassing a median house price of $1,125,000 in the December quarter, metropolitan Melbourne maintained a steady growth with a quarterly increase of 4.2 per cent and 18.9 per cent annually - the highest annual growth in over a decade.

The data shows houses in middle Melbourne, the typical suburban family belt, achieved a $1,230,000 median price with a reported annual increase of 18.3 per cent.

Houses in outer Melbourne have experienced price growth for six consecutive quarters and with a median price of $815,000 are now 16.4 per cent more valuable than 12 months ago.

Transactions grew too, with the number of homes that went under the hammer surging 144 per cent compared to 2020.

There was no letting up, either, with 15,954 auctions and 12,794 sales in the December quarter, making it the strongest ever performance for both auction volume and sales in any quarter.

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Even so, Mr Docking said he expected the market would soon begin to stabilise as some of the listing volume issues are addressed and buyers have more to choose from.

The impact, if any, of the Omicron surge on the real estate market was yet to be fully understood.

"At this stage it's too early to tell. Virus safety is front-of-mind and Victorians are well adjusted to the protocols they need to prepare for when attending inspections," Mr Docking said.

"Major factors influencing the residential real estate market continue to be low interest rates, lifestyle choices as more people work from home and pent-up demand after the series of lockdowns over 2020 and 2021."

Mr Docking emphasised the need for government to improve infrastructure investment to support this unprecedented growth in the regions.