Two people were seriously hurt while nine others suffered bruises after a hot air balloon crashed as it was about to land in New Zealand on Friday.

It was initially believed the balloon crashed into a house but authorities said it had landed in a farm owned by Philip Bunn on Morven Ferry Road near Arrowtown in Otago, just before 10 a.m., Friday.

Bunn said his sister saw the balloon coming in to land.

"She said it hit the ground and started bouncing and was getting dragged along the ground and bounced three times and spun around,'' Stuff.co New Zealand quoted him as saying.

"The briefing I've had from police is that it wasn't an emergency landing, it landed where it was supposed to land but the landing itself went wrong," Reuters quoted Queenstown Mayor Jim Boult as saying on Radio New Zealand.

Boult said he had never heard of a crash like this happening in the area before.

"It's sad this has happened," the mayor said. "On behalf of the rest of the district, I wish them a speedy recovery."

According to Sunrise Balloons, the hourlong trip near Queenstown was operating within normal wind speeds when the pilot attempted to land on the private airstrip.

"On approach, the balloon was caught by a sudden wind gust and the basket containing passengers impacted with a low bank," Sunrise said.

Experienced balloon pilot Carrick McLellan was treated at nearby Lakes District Hospital for moderate wounds, Sunrise said.

Company owner and chief pilot Hugh McLellan said he was "deeply upset" about the events, The Associated Press said.

Sunrise had temporarily suspended its commercial operation and was cooperating with police, Civil Aviation Authority and the Transport Accident Investigation Commission.