UPDATE 5.22pm The Government has launched an investigation into Friday night's balcony collapse in Dunedin.

18 Otago University students were injured during a Six60 gig at a Castle Street townhouse complex.

SEE ALSO: Otago University student seriously injured in balcony collapse

One 19-year-old woman who fractured her spine in several places after the balcony collapsed remains in a serious but stable condition in Christchurch Hospital.

She's had surgery, but her family is concerned she may never walk again and said she has a long recovery road ahead.

Building and Housing Minister Nick Smith has now asked the Ministry of Business, Innovation and Employment to establish whether the balcony was up to standard.

"Structural failure of buildings are rare in New Zealand but every incident of this sort needs to be thoroughly investigated to establish whether there were failings and whether our building systems are working as they should," he said.

Smith said they need to do everything possible to make sure these sorts of incidents don't happen again.

Dunedin's mayor Dave Cull welcomed the Government's investigation.

"It should look at not only whether this balcony was built to standard, but whether the standards are robust enough."

A preliminary report should be complete by the end of the month.