Grimes Cottage, the prize of the state government sell-off of public housing at Millers Point, sold under the hammer on Thursday night for $4.23 million.
The colonial Georgian residence was listed with a price guide of more than $4 million through McGrath's Richard Shalhoub.
The 184-year-old house was bought by lawyer John Schembri and his wife Karen, of Greenwich.
I've loved the area since I first visited when I was 13," said Karen Schembri after the sale was complete. "I can't stop smiling."
It is the 16th property to be sold as part of the sell-off of public housing, which has netted the state government almost $38 million to date.
The freestanding sandstone residence is expected to achieve the highest sale price of all the 293 properties to be sold by July 2016.
The head of Government Property NSW Brett Newman said: "The high spirited bidding for Grimes' Cottage was not surprising, it is one of only a few freestanding residences in the precinct."
As one of the oldest surviving residential buildings in Sydney, Grimes Cottage comes with some of the strictest heritage guidelines of all the former public housing properties.
It was built in 1831 as the first home of master mariner George Grimes and his wife Mary Underwood, the daughter of shipbuilder, merchant and distiller James Underwood.
The neighbouring six terraces were also developed by Mr Grimes from 1842 onwards.
The Schembri family are expected to undertake a sympathetic restoration and renovation of the rundown property.
The 416-square-metre block and coveted north-facing rear courtyard with Harbour Bridge views drew in a large pool of buyers.
Set over three levels, the five-bedroom, two-bathroom house has formal lounge rooms flanking the entry and iron lacework-framed rear balconies. There is a separate, self-contained studio at the rear.
The controversial sell-off has faced significant opposition from the local community. But unlike previous Millers Point auctions there were no protesters out the McGrath auction rooms on Thursday night.
Tenants' spokesman Barney Gardner said all such action has been suspended until they meet with Social Housing Minister Brad Hazzard on Friday.
Mr Newman said proceeds from the auctions in Millers Point and The Rocks were being used to fund the new supply of public housing, with projects already underway in Lurnea, Condell Park, Padstow, Warilla, Mount Warrigal, Chester Hill, Yagoona, Gymea, Kingswood, Casula, Beverly Hills and Miranda.
The sale tops the previous high for a state-owned property of $3.95 million set last September when a five-bedroom Victorian terrace sold on Lower Fort Street.
