A pilot steered his nosediving homemade plane away from a Melbourne shopping strip before crashing to a fiery death.

His plane hit the corner of a Chelsea home, bursting into flames and ending up in a laneway.

The man, in his late 70s, had taken off from Moorabbin Airport and was due to return there later in the day.

• Abbott tones down language on Putin
• Texas Ebola patient’s dog to be spared
• Royal hoax DJ bemoans trolling

Andrew Delaney, from the Country Fire Authority, said the pilot appeared to have bravely directed his plane away from a nearby busy shopping strip and children’s park.

“(It’s a) very brave, very brave activity that he conducted,” he told reporters on Tuesday.

“If you have a look he’s missed the power lines, so he’s done a very good job and missed houses really.”

Herta Nebert was in her kitchen watching television when the plane hit her house, exploding the windows and knocking her to the floor.

“The shock-waves coming in from the side of the kitchen sort of pushed me forward and I landed on my knee,” Ms Nebert told Fairfax radio.

“I heard the engine roar and a big boom because the plane went further down the lane on the side.”

Ms Nebert said she wasn’t hurt despite all the noise and damage.

“I’m so glad that I’m still alive, that’s all one can say,” she said.

Her husband William agreed his wife was lucky to be alive.

“I’m lucky too, I’ve still got a wife,” he said.

He said two pillars near the house, where the couple have lived for 29 years, might have deflected the plane down the laneway, saving his wife.

“Bugger the house, the insurance will have to fix (it), and I hope fast,” he said.

Witnesses report black smoke, engine stall

Witnesses heard the plane’s engine stall before it crashed into the house and caught fire about 1.30pm (AEDT) on Tuesday, Acting Inspector Janene Denton said.

The pilot died on impact.

Police said the single-engine light plane, which was travelling south along the Chelsea foreshore, was a home-built aircraft.

Witness Ashleigh Benson saw the light plane drop steeply in a “nosedive” before it crashed.

“This big thing of smoke came out, you could see it from about 10 minutes up the road,” Ms Benson told AAP.

Megan Johnston was working in her nearby office when she heard the plane go down.

“I heard the plane engine starting to splutter and it sounded very close,” Ms Johnston told AAP.

“Then I obviously heard a massive explosion.”

Plane fuel set the side of the Neberts’ house and the nearby fence on fire before firefighters put it out.

-AAP