A Sydney investor has paid a staggering $1.81 million for a three-bedroom weatherboard house in St Albans, more than $600,000 over reserve.

Seven hopeful buyers competed for 80 Alfrieda Street, nestled in a residential growth zone and with potential to be redeveloped into a four-storey apartment block.

The buyer originally had set their sights set on nearby 21 Mcivor Road, and flew to Melbourne without realising the auction was cancelled last minute because Brimbank Council compulsorily acquired it two days before its scheduled auction.

The Sydney investor — and others who intended to bid on Mcivor Road — then shifted their attention to Alfrieda Street because the properties had the same zoning, Ray White St Albans director Shaun Marijanovic said.

The result was a new suburb record for residential property, and equated to $2953 per square metre. The previous record price for a St Albans house was $1.1 million for 21 Albert Crescent, and the corner block had a planning permit for 19 apartments.

Domain Group data shows 80 Alfrieda Street last sold for $75,000 in 1988.

Mr Marijanovic said two buyers fought it out from about $1.5 million, and the buyer planned to lease it out before redeveloping in the future.

St Albans offered value for money compared to suburbs in other directions of the CBD, and there was good infrastructure and amenities in the area, he added.

On Saturday, about 460 auctions unfolded across the city. The Domain Group recorded a clearance rate of 79 per cent from 330 reported auctions.

Despite a surge in listings this week, it had failed to dampen Melbourne’s strong early season market, Domain Group chief economist Andrew Wilson said.

In the north-east, a public housing home at 250 Oriel Road in Heidelberg West sold for $808,000, more than $120,000 above reserve.

The three-bedroom house, on a 649-square-metre corner block, was among three public housing properties being sold as a part of the Olympia Housing Initiative on Saturday.

The project replaces “outdated and unsuitable housing” in Heidelberg West, Heidelberg Heights and Bellfield with new housing, and is funded by selling vacant or aged public housing properties in the area.

A first home buyer from the western suburbs trumped six others bidders including developers and investors for the 1950s property with redevelopment potential.

Nearby 34 Law Street in Heidelberg Heights sold for $785,000 — also to a first home buyer who paid more than $120,000 over reserve.

Meanwhile, 290 Oriel Road sold above expectations for $652,000 to an upsizer from the area, listing agent Barry Plant Ivanhoe’s David Kelly said.

“[Heidelberg West] is an area in transition, it’s developed a lot in the last 10 years and in the years ahead it’s just going to become increasingly gentrified,” he said.

“It’s an area that is changing and its proximity to the CBD is a driving factor.

“Average household income is on the rise; people with more money are coming into the area, seeing it as a value option.”

Cross-city buyers were also active in Bonbeach, where a young family from Coburg paid more than $200,000 over reserve for 40 Mernda Avenue.

The three-bedroom house sold for $1,005,000 under competition from about seven bidders, Hocking Stuart Chelsea director Daniel Wright said.