Several houses have been evacuated as Lake Wakatipu continues to rise, threatening low-lying areas of Queenstown and nearby towns.
Queenstown Lakes Mayor Clive Geddes said the lake was no longer expected to reach the levels predicted yesterday, but the threat of flooding remained.
• Queenstown braced for flooding
"We are in a better position than we predicted but the lake is high and still rising slowly. We also still have the threat of wave damage should we experience strong winds,'' he said.
The wind "could potentially push more water into the front of the town'' and would remain a risk for up to a week, Mr Geddes said.
Reserves and roads on the Queenstown foreshore flooded today, while two houses at Kingston and one at Glenorchy were evacuated.
The water had not yet entered the houses, but the owners were concerned about ponding on their properties, Mr Geddes said.
One homeowner left amid concerns about sewage leaking from a septic tank.
It was likely the lake would remain high for several days, but without further rainfall it could recede below flood warning level in over a week's time.
Rain forecast for Monday was likely to fall to the west of the catchment.
Lake Wanaka also continued to rise overnight but remained under the flood alert level.
Yesterday, 35 businesses prepared for overnight flooding in Queenstown with the district council putting up wave breaking pipes and sandbags in an effort to keep rising waters out of the town centre.
"People are very comfortable that we've woken this morning with the situation a lot better than we first expected, and that the reports that we've continued to receive today have reinforced that the outlook is brighter, rather than darker,'' Mr Geddes said.
Water has reached parks and roads, affecting two business on the waterfront - Bathhouse restaurant and Vesta Cafe.
"You've got to go there in gumboots, but they're there perched above the water and serving lunch and coffee,'' Mr Geddes said.
Beach and Rees Streets are closed to traffic, but all roads into the central business district remained accessible to retailers, contractors and emergency vehicles.
"For Queenstown it is very much business as usual because the impact of this event is on a very small area,'' Mr Geddes said.
Although "quite a few'' businesses were closed, many could begin to reopen during the next few days.
"As the news gets out, more and more people will be choosing to reopen their businesses,'' he said.
"There will be some who are adjacent to ponding in either reserves or the street, and that will take a few more days to go.''
The airport and other core infrastructure were not affected and most tourism businesses were operating.
Mr Geddes said Queenstown was prepared and was not expecting "water entering premises the way it did in 1999''.
Eleven years ago the tourist town was cut off by slips and major flooding. That flood cost Queenstown $46 million.
Since then the central business district had implemented flood-proof policies, such as higher floor levels, Mr Geddes said.
As predicted by MetService, heavy rain fell on and spilled over the divide last night, delivering 50mm of rain to the Wakatipu catchment.
"That rainfall is continuing to slowly push the lake level up," Otago Regional director environmental engineering and natural hazards Gavin Palmer said.
The regional council predicts that with no further rainfall the lake might peak at between 311.5m and 311.55m.
"That still gives us low-level flooding in Queenstown Bay, Glenorchy and Kingston," Mr Geddes said.
Two houses had been evacuated at Kingston and one at Glenorchy. Reserve areas and sections of road were flooded on the Queenstown foreshore.
It was likely the lake would remain high for several days, although without further rainfall the ORC predicted the lake could recede below flood warning level in over a week's time.
Rain forecast for Monday was now likely to fall to the west of the catchment.
"At this point, both councils will continue to closely monitor the situation and provide the community with the information and support it needs," Mr Geddes said.
Some businesses near the lakefront decided to open this morning, including Wilkinsons Pharmacy and a souvenir shop.
One hotel on the lakefront, Eichardt's Private Hotel, told the New Zealand Herald website that water had not yet spilled on to lakefront streets.
From an office window looking out on the bay at 10.50am, Real Journey Queenstown general manager operations Tracey Maclaren said the lake was moderately choppy - not enough to cause concern.
"We're quite comfortable [with the situation]. People are walking along the wharf in front of me and there's no danger," Ms Maclaren said.
The lake had not yet spilled on to the wharf, she said.
Denver Lee, manager for Positive Image Kodak Express told weatherwatch.co.nz that Queenstown's CBD was calm.
"In fact the local feeling is that the threat is on its way out, and so I imagine many businesses will start to consider putting things back to normal."
But Mayor Geddes said Queenstown's iconic Bathhouse restaurant - right on the lakefront - had already flooded and a cafe in the town's oldest building was also affected.
About 30 other businesses near the lakefront had prepared for flooding by sandbagging their entrances.
"It's very much wait and see," Mr Geddes said.
