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The fire took hold in the home's workshop, while the owner was out of town, about 11.45am.
Fire appliances from Queenstown and Frankton attended the blaze, and brought it under control by about 12.15pm.
Next-door neighbour Dan Murphy said he became aware of the fire when he smelled smoke while sitting in his study.
It developed within about five minutes from a small column of smoke to flames engulfing half of the structure.
It was fortunate it was a calm day, as his own home and a large area of trees were downwind of the fire, he said.
The house was one of the oldest in that part of Arthurs Point, he said.
Another nearby resident, Jim Pollard, said he was also alerted by the smell of smoke.
He and other neighbours helped firefighters pull out hoses, while another man broke into the house and carried out as much furniture as possible while it was safe to do so.