Police are scouring a house in suburban Melbourne for evidence after a terrorist siege in Brighton saw two men killed and three police shot.
Sherwin Place in Roxburgh Park has been blocked off and police have set up tents in the street as they search the house where the 29-year-old criminal Yacqub Khayre lived with his mother.
He killed an innocent apartment clerk and took a female escort hostage in Brighton on Monday, in what could have been a bid to lure police into a terrorist attack.
Dozens of police are milling around the Roxburgh Park house, removing bags of evidence.
Neighbour Icy Agustsson said the family mostly kept to themselves and he had no idea Khayre was a terror suspect.
Police search the home of Yacqub Khayre at Roxburgh Park, Victoria, on Tuesday, June 6. 2017. (AAP) Source: AAP
"I don't talk to them much, people keep to themselves in this area," Mr Agustsson told reporters.
"But it doesn't worry me, you get used to it and see it on TV. (Police) have to do their job."
Victoria Police confirmed on Tuesday morning they were treating the incident 'as a terror attack'.
Islamic State claimed responsibility for siege through their Amaq news agency, which claimed: "The attack in Melbourne, Australia was carried out by a soldier of the Islamic State in response to the call for targeting the subjects of the coalition states."
Khayre, a Somalian-born man, was shot dead as he burst out of an apartment building hideout while firing at police.
Victoria Police Chief Commissioner Graham Ashton downplayed the Islamic State statement.
"We're aware of, online, them having claimed responsibility, but then they always tend to jump up and claim responsibility every time something happens," he told reporters.
"But [Khayre] also made statements last night around (rival organisation) al- Qaeda."
Khayre had served jail time over a violent burglary in 2012 and was on parole at the time of Monday's siege, Victoria Police Chief Commissioner Graham Ashton said.
Prime Minister Malcolm Turnbull has questioned why he wasn't in prison.
Mr Ashton said Khayre had been on parole since being released from prison last November and "there was nothing wrong with his parole until yesterday."
Khayre also spent 16 months on remand before being acquitted of the 2009 Holsworthy army barracks terror plot in Sydney.
File: Yacqub Khayre (right) and Abdirahman Amend leave court in Melbourne, Thursday, Dec. 23, 2010. Source: AAP
In 2007, he was charged with armed robbery after holding up passengers on a Melbourne train, leaving one man with knife wounds.
Victoria Premier Andrews gives more details on attack
Police shot dead Khayre as he stormed out of the Bay St, Brighton serviced apartment building shortly before 6pm and began firing.
A female escort held hostage was rescued from the ground floor apartment.
Officers had earlier found the body of a clerk, an Australian national born in China, in the foyer.
"He appears to (have been) in the wrong place at the wrong time," Mr Ashton said.
He said it was too early to know what Khayre had been planning, but said it was a "possibility" that he wanted to ambush police.
"That's all been weighed into the calculations but we haven't found anything like a note or anything like that so far."
Mr Ashton earlier told Nine that the gunman had been known to police because of his background "in relation to terrorism matters, albeit some years ago."
He said there had been no information that he had been planning an attack.
"He is someone certainly known to us from his background but certainly as of yesterday there wasn't anything that we had that suggested that he was planning on embarking on this, that this was anything more than a spontaneous act."
