Homes in Victoria are selling quicker than they were a year ago, indicating the strong demand for potential home buyers, according to the Real Estate Institute of Victoria (REIV).

The average days-on-market of homes in the state went down to 41 days in June. Selling times were even shorter in Melbourne, where it only took 39 days.

"There remains a huge interest from buyers despite the state undergoing restrictions due to the pandemic. These figures show that our state's property market is holding strong and delivering great results across the board," said Leah Calnan, president of REIV.

Montrose in Melbourne's East reported the fastest turnaround across the state. Homes in this suburb only waited 14 days to get sold, down from 17 days during the same month last year.

Warranwood and Chirnside Park were also in demand, reporting respective selling times of 18 and 19 days.

In regional areas, Lake Garden in Ballarat has the shortest days-on-market at 24 days. Winter Valley and Wangaratta followed, with homes taking only 26 days to sell.

Calnan said these figures provide sellers with the confidence and assurance that buyers are still interested in snapping up property in Victoria. The relatively low level of selling activity in the market was able to maintain the prices and shorten the days-on-market.

"Properties spending less time on the market means sellers won't have to deal with the stress of a lengthy real estate transaction," she said.

The six-week lockdown in Victoria, however, could be extended due to COVID-19. While this will have limited impacts on private property deals, public auctions will be affected.

Eliza Owen, head of residential research at CoreLogic, said the auction market is manifesting a significant increase in the share of properties withdrawn from auctions.

As a result of the high rate of withdrawn properties, clearance rates and auction volume have declined. Owen said the withdrawal indicates the reluctance of sellers to test the auction environment under the lockdown.

"The physical restriction on auctions, as well as dampened consumer sentiment, will likely see auction volumes fall further in the coming weeks," she said.