Seven people including two men and five women were staying in the house at 79 Tallwood Avenue.

They left the home for the beach about 11am, and just over an hour later neighbours noticed flames coming from the middle of the home - believed to be the vicinity of the kitchen.

Personnel from Ulladulla Fire and Rescue attended, supported by Rural Fire Service volunteers, but the home was engulfed by flames at the time.

With flames shooting from the roof and out the windows, live electrical wires started falling to the ground and arced as fire fighters sprayed water onto and inside the burning house.

While the flames were quickly extinguished, the home was gutted.

The occupants returned about 1pm to find the home had been turned into a smouldering mass, destroying any possessions they had left inside.

The home was owned by people in Canberra, who were contacted on Sunday to let them know what had happened.

Police were investigating the fire’s cause, but said it appeared to be an electrical fault.