Man arrested after stabbing death, assault and manhunt

A 29-year-old man died and a 65-year-old woman was seriously injured at the Willoughby Street home just after 8am on Wednesday morning.

Heavily-armed specialist police spent hours at the home as it was believed Mr Sanderson was inside, however it was later confirmed he was not there.

That sparked an alert to the public and search through Melbourne's northern suburbs.

More than seven hours later, Mr Sanderson was taken into custody at a busy intersection near Preston Market at about 2.40pm.

He was found just a few kilometres from the Reservoir home, barefoot and wearing a jacket but no shirt.

Police confirmed the parties knew each other but did not release further details about their identities. A neighbour told Nine News a "lovely, beautiful family" lived at the home.

The Homicide Squad is investigating the death and assault.

The woman is recovering in a stable condition in the Royal Melbourne Hospital.