IT cost almost half a million dollars and has set a national record for a piece of jewellery sold at auction.

When the hammer fell yesterday, the buyer of the 8.19 carat heart-shaped diamond necklace was out of pocket by $450,000.

The price, which included a buyer's premier, smashed the record for a single piece of jewellery sold at auction in Australia, auction house Sotheby's Australia said today.

The spectacular diamond, which is suspended from a 24 carat marquis cut diamond line necklace, was part of 224 lots offered at the saleroom in Double Bay in Sydney's eastern suburbs.

It had been valued at between $350,000 and $500,000.

Overall, the auction generated $2.62 million, with 47 lots unsold.

It attracted bidders from London, Geneva, the US and across Australia.