It sounds like the deal of the century: a bargain price of $38,000 paid for 1,100 square metres of prime waterfront land.

Too good to be true? The community of Woy Woy on the central coast thought so.

They began demanding answers shortly after the development application was lodged for a four-story apartment block for seniors on the site which also includes the local bowling club and sits at the edge of the waterfront with a playground, bike track and walking path.

When residents started asking questions about the development, they discovered part of the land at the front of the block was once crown land and the Government had sold it off in 2015 for $38,830.

The developer's conduct is not under question.

Key points: A waterfront block in Woy Woy was sold by the Government for less than $40,000

A waterfront block in Woy Woy was sold by the Government for less than $40,000 The sale was advertised in a local newspaper hundreds of kilometre's away

The sale was advertised in a local newspaper hundreds of kilometre's away The deal has been referred to NSW's ICAC

Local resident Joy Cooper could not believe the price paid for the sought-after land.

"$38,000 is unbelievable, this is prime north-facing, elevated waterfront with panoramic views."

In the agreement between the developer and Crown Lands department, the estimated value of a similar parcel of land next door was $121,000.

Locals attempted to obtain the true valuation under Freedom of Information laws but were unsuccessful.

Resident Ross Cochrane president of the Save Woy Woy Waterfront Facebook group said "somewhere along the line that $120,000 [valuation] has come back to $38,000".

Sale advertised 380km away

The State Government is required by law to advertise the sale of public land in a newspaper local to the sale or in a state-wide publication.

In this case, the advertisement for the sale of the Woy Woy land appeared in The Bateman's Bay post — a publication that serves residents 380 kilometres south of Woy Woy.

An advertisement of the land sale appeared in the Batemans Bay Post. ( Batemans Bay Post )

Greens MP David Shoebridge has referred the sale to the Independent Commission Against Corruption.

"This is one dodgy deal... the Government treats public land like it's their own, like it's a play thing they can just doll out to whoever," he said.

"Well I think the public is sick of that, they want a government who holds the public land in trust."

The sale is one of the Government's many which has raised $9 billion for the coalition in the past six years.

"We have uncovered these failings after constant digging for the truth and we now need ICAC to look at not just this sale, but the thousands of other public sites sold off by the Coalition," Mr Shoebridge said.

Locals push to save bowling club

Residents want the sale reversed and for the Woy Woy bowling club to remain in place.

"This is community land, we've got a dragon boat club, kayak club, the bowlers, the fishing club," Ross Cochrane said.

"It's used by everyone around here, as residents and members of the public, the government should do the right thing and leave the land for us to use."

June Mitchell, 93, has lived in the area for more than 40 years and said if the development went ahead it would be "open slather for people with a lot of money to spoil wonderful places".

The four-story development is for seniors' accommodation. ( Facebook: Save Woy Woy Waterfront )

Lands Minister Paul Toole said the Government could not buy the land back and there was no current inquiry into the sale process.

"Well I think what you can do is have a look at those things that have happened in the past and you can always make improvements," he said.

Mr Toole said he was not the minister at the time of the sale and since July there had been a better community engagement process in place for the sale of public land.

This included the additional requirement that the Government advertise sales via local letterbox drops.