Castle St’s "Thirsty" student flat was listed earlier this month for $1,050,000.
Edinburgh Realty described the six-bedroom, two-bathroom flat as "one of the most sought-after rentals among second-year students".
It was returning $1470 per week.
"It presents a fantastic opportunity for investors to further add value and maximise returns, with scope for ongoing rental growth year after year."
Otago University Students’ Association (OUSA) residential representative Zoe Eckhoff said some flats in Castle St had extremely high "cultural value", but was still surprised by the listing price for "Thirsty".
"There is concern about the pricing of student housing, as well as the lack of quality at these extreme prices," she said.
"Given rising rent, I am concerned about ... affordability of housing as it has a flow-on effect to the accessibility of university.
"I only hope that these prices at least lead to some reinvestment in the properties."
The Otago Daily Times visited "Thirsty" this week and spoke to some of the tenants.
Hugo Buck and Johnny Van Leeuwen said they were paying weekly rent of $245 which, when combined with their four other flatmates, came to a total of more than $76,000 for the year.
"It’s a s... house, and if it was not on Castle St there’s no way it would be above a million dollars at all," Mr Buck said.
"If it was in this condition in another place, they’d probably have to fix it up a little bit.
He said 70 groups applied for it last year and they considered themselves lucky.
Asked how much rent it would take for people to not flat in Castle St, the pair agreed $280-$300 would be "pushing it".
It would not be worth it at that point, Mr Buck said.
"You obviously pay quite a lot, but the landlords can kind of do that because they know they’re going to get applicants in here every year.
"There’s no doubt that next year, they’ll probably raise the rent to probably $260.
"People are going to pay either way to be here."
The demand to live in Castle St was "huge", same as Leith St.
Some of their friends were already being charged $260 weekly rent.
This was "pretty high, especially when student loans are maxing out at like $330".
"You’re getting that extra, what, like $70 a week to get food, pay your power and everything else.
"It’s not a lot, especially if you don’t get a job."
Mr Buck said his grocery list consisted of mince, rice, vegetables and, "if you’re real broke", tuna.
Mr Van Leeuwen said it was tradition for students to spend their second year flatting in Castle St.
"You do get what you pay for.
"It’s not the best living conditions, but it’s only one year and I guess everyone’s trying to have a good time."
"Thirsty" is not the only flat in the million-dollar club.
Online property valuations also estimated other similarly-sized Castle St properties at $1.02m, $1.03m, $972,000, $995,000 and $1.17m each.
OUSA student support manager Dwaine Tait said rising rental costs in student housing areas were increasingly outpacing the incremental increases to StudyLink loans and allowances, leaving many students financially strained.
"Consequently, a growing number of students are living below the poverty line, with some resorting to unstable and inadequate housing options such as camping or couch surfing.
The university is aiming to increase its enrolments to 24,000 fulltime equivalent students by 2030 and reported 19,007 enrolments last month, about 5% more than last year.
University of Otago property and campus development acting director Gordon Roy said it was now working closely with the council to ensure there was enough housing to meet its growing roll.
"The university cannot meet future demand on its own and there will be an important role for private providers and investors, supported by appropriate council planning frameworks."
Mr Roy said its prime concern was not the value of properties, but whether there was sufficient, affordable accommodation for students that was well maintained and met healthy homes standards.
Director of student services Claire Gallop said it shared concerns about the cost-of-living pressures facing many students.
It continued to work with OUSA, the council and property investors and landlords to help resolve the issues.
