IS THIS the biggest bargain in Sydney?

A 99-year lease on a majestic, six-bedroom home in Millers Point was sold for $1.5 million on Wednesday, the first of 16 vacant Housing NSW assets to be sold to raise funds for five affordable housing properties for low-income people in the inner west.

The buyers, a couple in the legal profession with children, are thrilled with their new harbour views, but some real estate experts fear the NSW Government has short-changed itself by selling as the property market is nosediving.

"It's all a shambles. They should have done this years ago, but they left it too late and now the market is difficult," said co-founder of real estate firm Colliers International, Robert McCuaig. "It's a magnificent opportunity for the state to really generate some serious amounts of capital for housing desperate people, but they should have been sold five years ago when the market was at a high."

The 100-year-old, four-storey property at 59 Fort Street attracted an opening bid of $1.25 million and three bidders.

The winning bidder must spend a minimum of $400,000 over two years doing up the house and is allowed to on-sell the lease, subject to agreement from Housing NSW.

"It's an area we have been looking at for a long time," said the winning bidder, who asked not to be named. "It will very much be a family home, which we will maintain and highlight the historic integrity of the home."

The woman would not say if she thought the home was a bargain, but Martin Mulder from Ray White Circular Quay thought the 100-year old mansion was a steal.

"I would say in 10 or 15 years we will scratch our heads and say, 'Why didn't we buy it?' I think $1.5 million for a house in the city is quite good value," he said.

A spokeswoman for the Housing Minister, David Borger, said: "In turbulent times, an investment in a historic property in a heritage area is an excellent investment. Opportunities to lease these properties are very rare and the 80 people who were at the auction last night are testament to the excitement and interest these properties have sparked in the market."