Dozens of police donned riot gear to search the premises after smashing in the now boarded up doors of the Hat Factory Social Centre shortly after 3.30pm on Thursday afternoon. Many were wearing helmets and several in white police jump suits.

Two Aboriginal flags and several home-made banners had been unfurled along the property earlier in the week. One declared the property “reclaimed community space”.

Reading from a statement prepared by the group, resident Jack Summers-Webb said the eviction was difficult for residents, who intended to continue to reclaim unused buildings.

“This has been devastating for all of us, for the community and the people who live here,” Mr Summers-Webb said. “This is not the end for us; we’ll continue to do community spaces wherever we can.”

The exact number of residents affected is unclear. Mr Summers-Webb said there had always been between one and eight ongoing residents as well as a more itinerant group of 10 to 30.

Several of the residents, who declined to be named, said they had belongings locked inside the now-boarded up house. They claimed the space has been used as a squat since 2001.

According to the residents, the group also used the building to host a free library, a bicycle workshop, an open kitchen and used the lower level for performances and fundraisers.

“While housing prices in the city skyrocket, thousands of buildings sit empty and countless people struggle to find a roof over their heads. These buildings should serve as shelters for those in need, not as speculative capital for absent owners,” Mr Summers-Webb said.

Police said the intention was to remove the squatters so the owner could reclaim the property, but its residents had left by the time they arrived.

According to Australian Property Monitors, property prices in Newtown have increased by 58% in the last five years. The median house price is $985,000.

The Hat Factory occupies two blocks: 164-166 and 166-168 Wilson street. Both were purchased in May 1981 for $85,000 and $68,000 respectively.

Another property a few blocks down the street was purchased by the same owner in 1995.

The Hat Factory squatters claim the owner lives in the latter property, to which they have delivered letters and receipts for water rates and repairs for more than four years.

These letters are the core of the group's claim for tenancy rights, which they will put to the NSW Civil and Administrative Tribunal at a hearing on August 8 in a booking that pre-dates the eviction.

Mr Summers-Web said the group was not attempting to continue living in the premises but were fighting to get a proper eviction period.

He told Fairfax Media they were first given two days' notice that was later extended to a week. This notice period lapsed on Wednesday, the day before the police raid.

Chris Martin, the senior policy advisor for the NSW Tenants Union, told Fairfax Media the union had spoken to the squatters but was not acting for them at this stage.

According to Dr Martin, the core issue for squatters is proving they are tenants, which would entitle them to at least a month's notice of eviction.

“A tenant is someone who is granted a permit to occupy a premise in exchange for value. In 99 per cent of cases, the value that changes hands is money, as in rent. But it could be doing work on the place or for the owner, as that’s value also,” Dr Martin said.

He added the only appropriate place for tenancy claims to be resolved was at NCAT tribunal hearings.

Evictions of tenants require an order to from NCAT that is executed by the NSW Sheriff’s Office.

“It would be a brave or perhaps foolish landlord or police officer for that matter who thinks they know how the tribunal might determine any case.”

The City of Sydney Council, in which the property resides, has confirmed the eviction was instigated by the property owner.

A spokesman for the council told Fairfax Media officers had twice attempted to inspect the property in the last month after a complaint about public health and safety matters but were prevented from entering by the squatters.

Stephen Gibson has been living on Wilson Street for 30 years and said the raid took the neighbourhood by surprise. He described the use of police, particularly the riot squad, as overkill.

“The people there have been incredibly quiet and you would not have known they were there. The banners are atypical,” he said. “I have walked my dog past for years, and always thought ‘good on you’,”.