Four appliances and 16 firefighters were required to bring the blaze in the laundry and roof of the Granville Tce villa under control.
Firefighters were called shortly before 3pm.
Appliances from Roslyn, Dunedin Central, Lookout Point and St Kilda attended the fire.
A female flatmate, who was home at the time of the fire, said she was ''shocked, but fine''.
She and a male flatmate were at home in another part of the house as the fire took hold. The third flatmate returned home to find the laundry on fire.
''By the time I walked in, the fire was floor to ceiling ... but it hadn't spread to the rest of the house yet,'' he said.
''I guess it's kind of lucky I came home when I did.''
The trio, who did not wish to be identified, were assessed by paramedics for smoke inhalation, but were otherwise unharmed.
They were yet to gain access to the property to view the damage when they spoke to the Otago Daily Times yesterday.
''Looking at [the house] I'd say it's the laundry and the kitchen and part of the bathroom that are wrecked,'' one flatmate said.
''I'm quite hopeful that most of the bedrooms have been missed but between smoke and water it would have got most of it.''
The flatmates were planning to stay with friends last night.
A fire investigator will look into the cause of the fire.
Firefighters brought the fire under control by about 3.30pm.
Station Officer Mike Harrison praised the occupants for having working smoke alarms.
''The property did have smoke alarms and those alarms did go off, which is a good reminder this weekend with the end of daylight savings to make sure you have working smoke alarms,'' he said.
