The home, in the suburb of Arncliffe, was the target of an early morning raid and remains cordoned off with tape warning of a toxic, nuclear or biological hazard inside.
The small brown-brick apartment building was cut off from the road by red and yellow tape saying: "Contaminated area - do not enter - hot zone".
Local commercial broadcaster Channel 10 reported that mercury and uranium isotopes were found inside, while the Daily Telegraph said officers had found nuclear isotopes.
The Australian Border Force (ABF) would not confirm media reports about the presence of radioactive material at or near the property.
"The ABF can confirm it is conducting an operation today in Arncliffe, New South Wales, with the support of... emergency services," a border force spokesperson said in a statement.
"All appropriate safety measures are being implemented.
"People in the vicinity of the location are urged to follow all directions from emergency services."
Sam Abraham, 19, was trying to get home when he came across the closed road.
"It's scary finding uranium in your neighbour's house, you come into the street and there's police," he told AFP.
"It's not something that usually happens in Arncliffe."
Nemr Khamis, 60, told AFP: "In the morning I heard the loud trucks and all that stuff, I looked out of the window and I saw the ambulance and the fire brigade.
"Then I had to come out and look, then I went inside again. I had a shower and came back and when I came back I had a baby with me and the police told me to go inside."
Khamis phoned relatives who told him "there's some uranium in the street just off the unit", he said.
The Australian Radiation Protection and Nuclear Safety Agency also refused to confirm the presence of nuclear material.
"ARPANSA will continue to support relevant state and federal agencies in the ongoing management and resolution of the situation," a spokesperson said.
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