It seems rare to see the price of Sydney property start with a three – and be in the hundreds of thousands, as opposed to the millions.

But at mere $319,000 a tiny slice of Paddington, at approximately 10 square metres according to the company title contract, is on the market.

Located on Underwood Street the pint-sized studio is a five-minute walk to Oxford Street and the Paddington Reservoir Gardens.

The property has a loft-bed with ladder provided, kitchenette, modern bathroom and floorboards, and records showed it last changed hands for $175,000 in 2011.

“What you are buying there is a great location”, said agent Mitch Dansey, from Di Jones Real Estate.

Mr Dansey said the apartment had appeal for first-home buyers and investors and he’d seen both at the well-attended open home on Saturday.

“They rent really well, those apartments”, he said. “But there’s a reasonable amount of owner-occupiers in the building too.”

The owner had bought the studio for her daughters to live in while they were studying in Sydney.

Mr Dansey said the price point was the main factor drawing interested buyers.

Pricefinder records show Paddington’s price median at $2.3 million across houses and apartments in 2017, with a median sale apartment price of $850,750 over the past six months.

But there were also a handful of sales at the lower end of the market. A 23-square-metre studio at 28/54 Hopewell Street, Paddington sold for $370,000 via private treaty in October.

Another studio at 21/339 Oxford Street sold for $400,000 in the same month.

One of the other apartments at 6 Underwood Street sold in 2016 and is currently available for rent for $360 a week. Another – the slightly larger number 22 – is also for sale.

Supply of these small apartments is limited. New apartments of this size cannot be built – NSW increased the minimum size of its studio apartments to 35 square metres with new planning regulations in July 2015.

And properties of this size can pose issues for borrowers. Jessica Darnbrough, head of corporate affairs for Mortgage Choice, said buyers would need a 20 per cent deposit for any property under 50 metres-square.

“Where the deal may fall over is the lender’s mortgage insurer,” Ms Darnbrough said. “Often they see those places as a bit too risky for them. If a borrower wants to borrow for that, they’ll need a guarantor or 20 per cent deposit.

“Lenders will look at certain things – size constraints, the position of the block. It could be that they already have a lot of exposure in that apartment block – they might not want to finance more apartments there,” she said.