New Zealand's PM has visited the scene of the earthquake

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New Zealand's prime minister John Key has visited areas hit by a powerful earthquake that rocked the country and claimed two lives.

The magnitude 7.8 earthquake struck the South Island, north of Christchurch, just after midnight on Monday morning, triggering landslides and a small tsunami. Strong aftershocks continued to shake the country on Monday.

The quake mostly hit a rural area dotted with small towns, largely sparing New Zealand the devastation it saw five years ago when a deadly earthquake struck the same region.

New Zealand earthquake
Parts of a road were reduced to rubble (Mark Mitchell/AP)

Sunday's quake caused damage in Wellington, the capital, more than 120 miles to the north. It was also strongly felt to the south in the city of Christchurch, which was devastated by an earthquake in 2011 that killed 185 people. Residents said the shaking went on for about three minutes.

Key flew over the destruction in the small coastal town of Kaikoura by helicopter on Monday afternoon, as aftershocks kicked up dust from the landslides below. Cars could be seen lying on their sides and parts of the road were clearly impassable.

John Key
John Key, centre, surveys the damage (Katie Bradford/AP)

"It's just utter devastation... That's months of work," Key told acting civil defence minister Gerry Brownlee. He estimated the clean-up would cost hundreds of millions of dollars and clearing the debris and blocked roads could take months.

Key said the tsunami threat had since been downgraded to coastal warnings, and authorities had no reason to believe the death toll would rise above two. He added that officials had decided not to declare a national emergency because New Zealand's regions were able to adequately cope with the situation.

New Zealand earthquake
Rail links were also knocked out (Mark Mitchell/AP)

New Zealand sits on the Ring Of Fire, an arc of seismic faults around the Pacific Ocean, where earthquakes are common.