The bungalow was owned by Southwark council and it is believed that the property has not been lived in since 2002 but has been sold for a staggering Â£920,000, which is nearly double the average value of houses on the same street.
The land and bungalow consist of just an entrance hall with three rooms inside and does not have a bathroom.
The property is in such a bad state that it will need to be demolished and as yet does not have any planning permission to be developed. However the plot could potentially be worth millions if converted into trendy new flats.
The property went to auction with a guide price of Â£590,000 on Monday and after a frantic bidding war the bungalow was finally snapped up for Â£920,000.
The money raised for the property, will be ploughed back into the council's housing programme.
Councillor Richard Livingstone said: "Although selling council homes is not something we would normally want to do, sometimes the costs for repairs and refurbishment... is simply too high.
Mr Livingston added the money would be used to fund its housing investment programme which includes building 11,000 new properties in the borough by the 2040s.