The six tenants were out when the armchair on the flat's porch was set alight on Saturday night about 11.15.
Det Sgt Roberts said a passing pedestrian rang the Fire Service, which attended the blaze.
"This was just a senseless act of arson which, because of the make-up of the area involved, could well have spread to the attached flat next door, exposing tenants and other residents, putting their lives at risk."
Police are appealing to anyone in the area at the time or who might know something to come forward.
Flat occupant Julia Prier said the flatmates were out socialising, but went "racing" back when they got a phone call to say the house was on fire.
The worst thing was the smoke which had permeated the house, Ms Prier said.
The students were airing the house yesterday, and were huddled under duvets in the lounge when the Otago Daily Times visited.
The flatmates had vacated the front two rooms, which were the worst affected.
The fourth-year students were taking the disruption in good heart, and said they did not know when the badly damaged front of the house would be repaired.
They had no idea who lit the fire.
