A pilot has been killed after his single-engine light plane, believed to be homemade, hit a house and crashed in Melbourne's south-east.

Police received numerous calls from people saying a small aircraft appeared to be experiencing engine problems before it crashed near the property at Chelsea about 1:30pm AEDT.

The man, aged in his late 70s, died on impact.

Acting Inspector Janine Denton from Victoria Police said the plane, which was travelling along the foreshore, caught fire on impact and damaged two vehicles.

"We're told by witnesses there was a stall of the engine and it's come down and collided with a corner of a house and ended up in a laneway behind that house," Acting Inspector Denton said.

"At this point we believe it may be a homemade aircraft."

The Australian Transport Safety Bureau (ATSB), which is investigating the crash, said the aircraft was an "amateur built" Van's RV-6.

Police said aircraft took off from Moorabbin Airport and had planned to return there later in the day.

Andrew Delaney from the Country Fire Authority said it looked like the pilot took evasive action.

"He's missed the powerlines, he's done a really good job and missed houses, he's just collected a bit of the fence and pretty much guided his plane down the laneway," Mr Delany said.

He said it was lucky no other houses were damaged.

"From a fire brigade perspective it was a fairly easy job for us in that there wasn't the two houses on fire spreading to other houses."

'In my mind I knew it was a plane'

Herta Nebert was inside the house at the time and said the crash felt like "a shockwave".

Herta Nebert said she felt lucky to be alive after a plane clipped her home. ( ABC News )

"I was about to put a glass platter back into the wall unit and before I could pick it up I hear this tremendous roar, and then it really banged, which must have been the wing of the plane that ended up in our garden," Ms Nebert said.

"I fell on my knees because the shockwaves came straight from the window and the glass was all over the place.

"I just ran out the front and saw the flames and thank goodness the neighbour was already there trying to put it out.

She said she did not have a scratch on her but was treated for shock by paramedics at the scene.

"I heard the roar and in my mind I knew it was a plane, but I didn't think it was going to fly into the corner of our house.

"I think I'm a very lucky woman. I'm glad to be alive."



Witnesses report black smoke, horrific smell

Emma Maddocks, who works at a dental practice two doors away from the crash, said she could hear the plane as it approached the house.

She then heard a big bang.

Ms Maddocks thought the plane was trying to land on the beach but did not make it.

"We heard a big bang that shook the whole building," she said.

"There were lots of bricks and fire."

She said the plane went into the side of the house from a laneway.

Joanne, who works at Central Bayside Community Health Services a couple of blocks away, said they were just finishing lunch when they heard a horrific noise.

"I heard this big explosion. We came running out and saw black smoke coming up," she said.

"It was a huge explosion. There was huge black smoke, horrific smells. Everyone came running.

"When I knew what it was, I came back to the office. I couldn't handle it."