Two people have died and 17 others are in hospital after a balcony collapsed at a house party in Melbourne's east on Saturday night.

Key points: Two women, aged 59 and 37, died after the balcony collapsed

Two women, aged 59 and 37, died after the balcony collapsed Police believe more than 30 people were on the balcony at the time

Police believe more than 30 people were on the balcony at the time The ABC understands a Tupperware Christmas party was being held at the house

The ABC understands more than 30 people were attending a Tupperware Christmas party in Doncaster East, and it is believed they were trying to take a photo when the balcony collapsed about 10:30pm.

A 59-year-old woman, from Croydon in Melbourne's east, died at the scene.

A 37-year-old woman, from Reservoir in the city's north, died in hospital on Sunday morning.

Authorities described the scene as chaotic. ( ABC News )

Seventeen other people were also taken to hospital with various injuries, but police said they were non-life-threatening.

Neighbour Andrew Stone said he was watching television when he heard a loud crashing noise "like a tree being felled".

"I got up and came out to the street, because I knew it wasn't right, and that point a woman was sort of in hysteria — she'd come out and she was yelling 'oh my god, oh my god'," Mr Stone said.

Police are continuing to investigate the cause of the tragedy. ( ABC News: Jonathan Hair )

"People started coming out [of the house] with visible blood, injuries, clearly distressed, lying down on the grass and obviously receiving first aid.

"It's one of those things that you don't think about, obviously, hosting a nice Christmas break-up.

"When I got home, the atmosphere from it was really good — people were laughing and having a really good time so for that to happen is unbelievable."

It is believed the balcony collapsed as a group was taking a photo. ( ABC News )

Acting Superintendent Kerin Moloney said it appeared to be an accident.

"This is a tragic incident that has been magnified by the fact we are only one week away from Christmas," he said.

Ambulance Victoria state health commander Paul Holman said it was a chaotic scene that required a major emergency response.