It is billed as a sale of the century for Asian billionaires, capable of shattering Australia's house price record. Elaine, a Victorian mansion on Sydney Harbour, which went up for sale on Tuesday, is tipped by its estate agent to sell for up to A$100 million ($87.5 million) becoming a potent symbol of buoyancy, or froth, as some say, in the city's property market.
"Foreign buyers, particularly in China, are buying into Sydney as a secure long-term investment," says Howard Tanner, a prominent architect who worked with the Fairfax family, the media magnate owners, on proposals for renovating the luxury property.
"There is every reason to believe it will achieve a record sale," he says.
Indeed, the near-legendary Chinese and other foreign buyers are credited with fueling property hotspots across the globe, from London to the Algarve to Miami Beach.
And in Australia too, foreign buyers, together with cheap money and supply constraints, have helped push up house prices, prompting some commentators to warn of an emerging housing bubble in some of the country's bigger cities.
(Read more: Are fears ofan Australian housing bubble overblown?)
Prices in Sydney jumped 15.1 percent last year, pushing the median house price to A$763,169. In Melbourne and Perth, property prices increased 8 percent, according to Australian Property Monitors, an information provider to the banking and property industries.
"I think we are seeing the creation of a spectacular bubble on top of a spectacular property bubble," says Steve Keen, a professor of economics and author of a blog called Debtwatch.
"Affordability in the market is being shot to pieces with house prices increasing to about six times incomes in Sydney," he says.
(Read more: Where's thenext property bubble building?)
Mr Keen is a long time bear on Australian house prices, who famously lost a bet with an economist at Macquarie Bank in 2008 over his claim that prices would soon reverse sharply. Two years later he walked 225km from parliament house to Mount Kosciuszko wearing a T-shirt saying "I was hopelessly wrong on house prices – ask me how" to honour the wager.
But after a period of price stagnation following the global financial crisis, the more recent rapid clip of increases prompted the International Monetary Fund and the OECD to wave red flags.
"Looking forward, attention should be paid to the risk, as in any situation where asset price inflation accelerates, that a prolonged period of rapid price growth could give rise to expectations-driven, self-reinforcing demand dynamics and price overshooting," said the IMF in November.
(Read more: Asia's commercial property deals set for record year)
The price increases are being driven by a combination of historically low interest rates, increasing foreign investment, particularly from China, a shortage of quality housing and generous tax incentives for investors, who can write off property losses on other income.
The end of a decade-long mining investment boom has dented business confidence and caused unemployment to rise to almost 6 percent. In response, the Reserve Bank of Australia has slashed interest rates to 2.5 percent and pinpointed housing construction as a key growth sector for the economy.
"On present indications, the most prudent course is likely to be a period of stability in interest rates," said Glenn Stevens, RBA governor on Tuesday.
He cited business uncertainty, subdued business investment and rising unemployment as reasons for keeping interest rates at an historic low.