The Parnell house the University of Auckland paid $5 million for which will be the home of incoming vice chancellor Dawn Freshwater.

The University of Auckland is defending a decision to spend $5 million on a house for its incoming vice-chancellor Dawn Freshwater.

The house, in the upmarket Auckland suburb of Parnell, will be rented by Freshwater, who takes up her post in March.

It will also be used as a venue for "university-related events and hosting", university spokeswoman Lisa Finucane said.

"The university purchased the property to replace another similar property in our portfolio that is currently being prepared for sale."

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Finucane would not say whether the property deal was part of Freshwater's salary package.

"We wouldn't discuss the terms of employment of either the current or incoming vice-chancellor so won't be commenting further."

Freshwater is currently vice-chancellor of the University of Western Australia.

She is the first woman to hold the position at the University of Auckland since it was founded in 1883.

Supplied The University of Auckland's new vice chancellor Dawn Freshwater takes up her post in March.

New Zealand Union of Students' Associations national president Isabella Lenihan-Ikin described the property purchase as frivolous.

"A couple of years ago the University of Auckland closed a couple of its specialist libraries in the architecture and fine arts departments under the justification that the cost of keeping them open was too high and the university couldn't afford them," she said.

"At a time when students are facing severe financial hardship this is terrible. The university is funded by both taxpayers and fees from students."

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Lenihan-Ikin said it was one thing to buy a house for the incoming vice-chancellor and another to buy a property in one of Auckland's most expensive suburbs.

A recent real estate listing for the Parnell property said the three-storey residence was "elegant, relaxed, on trend, timeless and just so wonderfully liveable".

It was "moments" from the Parnell and Newmarket shopping precincts and "minutes from the CBD", the listing said.

"You could say it has the best of Auckland on its doorstep."