Bubble fears: The $2.62m house sale that has Sydney worried

The house at 44 Kingston Street sold for $2.62 million. Photo / Supplied / Day and Hodgson Real Estate

House-buyers in Sydney will be feeling Auckland's pain, with the sale of a modest three-bedroom house for A$2.62 million fuelling speculation of a housing bubble there.

The median price for a three-bedroom house in the inner-western Sydney suburb of Haberfield, where the house was sold, was A$1.5 million in March, Business Insider reports.

The last time the house at 44 Kingston St was sold was in 1980, where it went for $110,000.

The property in Haberfield is a modest three-bedroom, one-bathroom house. Photo / Supplied / Day and Hodgson Real Estate

Property analysts in Australia fear Sydney is heading for a crash, and the record prices being recorded at auction are not sustainable or economically desirable.

"The 2015 Sydney housing boom has achieved the dubious distinction of bubble status," says finance and economics commentator Michael Pascoe.

He says house prices in the city are red hot, noting the bubble is "a purely Sydney phenomenon".

"Prices here are boiling, Melbourne is merely warm and the rest of the country somewhere between tepid and cold. To an extent then, Australia has the same problem as New Zealand - a dwelling price bubble concentrated in one city."

The surprising sale of 44 Kingston St - a three-bedroom, one-bathroom property on 697m2 of land - follows similar cases in Auckland.

A two-bedroom flat in Mt Albert sold for $797,000 last week, 77 per cent above its CV price.

Another house, a four-bedroom property on Waiheke Island, sold for nearly three times its valuation at the end of last year, reaching $2.4 million.

Over the weekend, a run-down house in Mangere Bridge sold for $677,000 - more than twice its land value.

Mr Pascoe suggests Sydney's housing bubble is being fuelled by similar factors to Auckland.

Elsewhere in Sydney, a Waverley house sold for A$2.41 million, well-above the median price of $1.7 million in the area and beating its reserve price by $410,000.

Another property in Earlwood sold for A$2.1 million, double the median price for the suburb and A$200,000 over its reserve.