A hot air balloon that crashed this morning near Queenstown leaving 11 people injured was seen moments earlier flying low near powerlines "coming down too fast".

Emergency services rushed to the crash site at Morven Ferry Rd about 10am.

A St John spokesman said they received a 111 call from a member of the public at 9.54am.

"We have dispatched two helicopters, four ambulances, a manager in a first response vehicle and a First Response Unit to the scene."

Two people with serious injuries are being transported to Dunedin Hospital by helicopters.

Emergency services are reportedly on the scene (Photo / James Allan)

One person with moderate injuries and eight with minor injuries are being transported to Lakes District Hospital by ambulance.

Queenstown Lakes mayor Jim Boult said he had just been briefed by police.

Contrary to reports, he said the balloon was landing where it was supposed to land at Morven Ferry Rd, but on landing it was "hit by a gust of wind".

"Some people were thrown out of the basket, the balloon basket dragged across the ground until it hit a fence, and the remaining people either exited the basket or were thrown out of the basket," Boult said.

"The balloon itself then came down on power lines attached to the house, but that had no effect on the people that were in the basket.

"On behalf of the community, I express our deepest sympathies to those involved, and we wish them all the very best for a speedy recovery."

Boult had no information on where the passengers were from.

Photographer James Allen said it appears the balloon was dragged off course.

"This one seems to have blown down somehow through one or two sets of powerlines below the Queenstown cycle trail. It's travelled 30-50m into the side of a bank then dragged maybe 100m into a deer paddock, through a deer fence and then slammed into the house.

"From the power lines to the house is probably a good 200m of out of control balloon."

He said there is a moderate breeze in the area.

"A good bit of wind here, nothing crazy. but a bit of wind."

He said staff from Sunrise Balloons were at the house.

"One set of people were out on the road with us and another set at the actual house.

"You can see a transport bus and the actual four-wheel drive and balloon trailer has been brought to the house as well."

The company is family-owned and operated in the region since 1998.

Owners Hugh and Maureen are supported by their son Carrick, a pilot, daughter Kirsty and son Graham.

The hot air balloon before it crashed near Arrowtown. Photo / Supplied

The owner of the property where the hot air balloon crashed, Phillip Bunn, said the balloon ended up next to his house.

He was not home at the time, but his sister was and witnessed the crash, leaving her very upset.

Balloons landed on their property quite often.

"I just feel sorry for the people on board."

He was still in the dark about what happened.

An Otago Daily Times reporter at the scene said it appeared the hot air balloon had hit a house. It was now lying on a paddock near the property.

The owner of the property where the hot air balloon crashed, Phillip Bunn, said the balloon ended up next to his house.

He was not home at the time, but his sister was and witnessed the crash leaving her very upset.

Balloons landed on their property quite often.

"I just feel sorry for the people on board."

He was still in the dark about what happened.

An Otago Daily Times reporter at the scene said it appeared the hot air balloon had hit a house. It was now lying on a paddock near the property.

Gibbston resident Sonja McCord said she was driving when she noticed the craft barely above powerlines.

"I thought, 'That's coming down too fast' and seemed a little bit in distress."

She said it concerned her that the balloon was so close to the ground in an area where it shouldn't be.

"Normally I see hot air balloons all the time on a winter morning and as I was coming back home from the school run I noticed the hot air balloon flying quite low and didn't normally land in the Arrow Junction area. It looked like it was in a bit of trouble."

A Fire and Emergency NZ spokesman said two crews, one from Arrowtown and one from Frankton are attending.

Photos from the scene show a rescue helicopter has landed in a paddock, flanked by several ambulances. A large semi-deflated balloon can be seen through tree branches. There are numerous power lines visible at the site.

The balloon before it crashed. Photo / Andrew Norton

Aurora Energy says - At the request of the emergency services we have turned off the power for the safety of emergency responders and the public as they attend an incident.

Another witness told the Herald: "I can see a coloured balloon just among the trees."

However, the hot air balloon crash was nowhere near the road, the witness said.

Several ambulance vehicles can be seen at the site and a helicopter.

The man could not see the hot air balloon itself and had not noticed any in the sky early this morning.

A balloon can be seen through the trees. (Photo / James Allan)

Transport Accident Investigation Commission has confirmed it's aware of the event but has not yet made a decision on an investigation.

The Civil Aviation Authority and Transport Accident Investigation Commission have been notified of the crash.

Arrowtown Junction near where the hot air balloon has crashed. Photo / Supplied