In front of more than 100 spectators, the three-bedroom, one bathroom home, at Farrell Road, was auctioned for $861,500 – well above the reserve of $700,000.

About 20 protesters travelled from around the Illawarra to attend the auction, and carried placards saying “stop the sell-off of public housing” and “massively increase public housing now”.

During the official proceedings, auctioneer Lou Niceski had trouble being heard over the protester’s convenor Paul Matters who was shouting through a megaphone.

Mr Matters argued many Housing NSW properties like the Bulli home were being left vacant or sold off while there were still thousands of people on the government’s public housing waiting list and a growing number of homeless in the Illawarra.

Among the protestors were public housing tenants Eric and Rosemarie Earley, who have lived at a Woonona home since they arrived in Australian from Scotland in 1974.

A former steelworker and coalminer, Mr Earley claimed he had originally been told he would be able to buy his home from the government but that this opportunity had been taken away from him.

“We moved in and built a garage, put down all the concrete, planted trees, put in carpet and put the gas on expecting to buy,” he said.

“But then we were told we would never be able to buy, so we’ve been paying rent to them ever since.”

The 75-year-old said he was now worried he would be moved out of his long time family home, as many similar houses in Woonona and Bulli were being sold off by the government.

“When we moved here no one wanted to live here, because it was a slaughter yard but now because the land values have gone up they think poor people don’t have the right to be here,” Mr Earley said.

“But I am most worried about the people who are homeless – living on the beach at Coniston or under bridges in Sydney – when we’re selling off these homes or leaving them vacant for 12 months.”

The protesters – who were supported by a small contingent from Millers Point – planned to attend another Housing NSW auction at Point Street on Saturday afternoon.

The result of this auction is not known and Mr Niceski declined to comment on both auctions.

When asked about the decision to sell the Bulli homes, a Family and Community Services spokesperson said the government had sold 37 houses in the Illawarra over the past 12 months.

Thirty-eight new dwellings would be constructed in 2014-15, the spokesperson said.

“The department regularly reviews its property portfolio and makes decisions on sales based on the condition of the properties and their suitability for public housing,” a statement from the FACS said.

“The proceeds from the sale of the department’s properties will be reinvested in the social housing system to support the department’s housing priorities including redevelopment, maintenance and upgrading.”