Emotions were mixed as residents yesterday began returning home to the township, which has lost at least 35 residents in Victoria's savage bushfires, with many more deaths expected.

''Everything's gone, everything's just gone. When people come back, are they going to rebuild or are we just to become a ghost town with a few spots of people around?'' wondered local Jenny Norman.

''I'm not sure it can. I hope so, but I'm not sure.''

Others are more optimistic, saying rebuilding has already started, even as threatening spot fires continue to rage in the valleys surrounding the hill town of 1500 residents the single worst-hit community in the fires which so far have claimed 130 lives across the state.

''We can rebuild this place in a flash,'' businessman Roy Ellis said.

''You see it and hear it in people's attitudes, people sharing generators and stuff, it's the spirit of the people here.

''Kinglake will come back.''

Mr Ellis said the loss of property and assets was ''absolutely nothing'' compared to the loss of life, adding he still did not know the fate of three neighbours and acquaintances from around town.

''One guy I know was down at Toolangi, but because we're actually cut off from here and the Downs, we can't get down there and find out.

''It's things like that, not knowing about those three people, that's the hardest part.

''At the end of the day, all this is nothing,'' he said, pointing to buildings razed to the ground.

Ms Norman, whose house miraculously survived the 220,000ha firestorm which ripped through the region on Saturday, expected the death toll to rise.

''We haven't heard the official death toll as such but they're saying there's more bodies in cars that they haven't found yet and they're still checking houses,'' she said.

''Kinglake will be a town in mourning for a very long time.