SYDNEY—Sydney houses with crumbling walls, shredded ceilings, and bathrooms and kitchens stripped of fixtures are getting snapped up for millions as buyers try to grab a slice of Australia’s soaring property market. Last week, a derelict brick cottage in the city’s northwest sold for A$1.6 million ($1.2 million), a price the real estate agent handling the deal said was “much more than we were expecting.” Photos on the property agent’s website showed torn carpets, tattered roll-up blinds, and a grime-caked kitchen. “(The buyers) are individuals who wanted to live in this part of Sydney and are looking to knock down the property and rebuild,” McGrath sales agent Michael Dowling told Reuters. Despite the condition of the house, they were attracted by the nearly 5,382 sq ft (500 sq m) of land, he said. “More supply is coming into the market but there is still heaps of demand.” In another desirable …