A boy takes skateboard on a warped road in Paiapoi, 20 kilometres south of Christchurch, N.Z., on Sunday. (Rob Griffith/Associated Press)

Damages from the 7.1-magnitude earthquake that hit New Zealand could total about $1.8 billion (NZ), officials said Sunday.

More than 500 buildings and houses have been deemed destroyed in Christchurch, New Zealand's second largest city, following the quake, which struck at 4.36 a.m. local time Saturday.

"The Treasury Department has put together an estimate of $2 billion. They got downgraded it to $1.8 billion, but it's fair to say there's widespread skepticism about the numbers being touted, and the expectation is it that it will be well in excess of $2 billion," freelance reporter Nick Smith told CBC News.

Rubble and debris lie in front of a damaged business following Saturday's powerful 7.1-magnitude earthquake. (David Alexander/NZPA/Associated Press)

A state of emergency was declared after power and water were cut off in the South Island city of almost 400,000. There are concerns people could be injured by damaged or collapsed buildings.

An overnight curfew in Christchurch was lifted Sunday, but the city centre remained sealed off.

Mayor Bob Parker said it was an "absolute miracle" no one was killed by the quake.

Only two serious injuries were reported as chimneys and walls of older buildings were reduced to rubble and crumbled to the ground.

Quake may have ripped new fault line

Canterbury University geology professor Mark Quigley said Sunday what "looks to us that it could be a new fault" had ripped across the ground and pushed some surface areas up.

The quake was caused by the continuing collision between the Pacific and Australian tectonic plates, Quigley said. Its epicentre was 30 kilometres west of Christchurch

"One side of the earth has lurched to the right … up to 11 feet (3.5 metres) and in some places been thrust up," Quigley told National Radio.

"The long linear fracture on the earth's surface does things like break apart houses, break apart roads. We went and saw two houses that were completely snapped in half by the earthquake," he said.

Concern was shifting to the weather and news that heavy rain and flooding could slow cleanup efforts.

"We've had gusts of up to 130 km/h and heavy rain," Smith told CBC News.

With files from The Associated Press