A scene examination is continuing. Victim Support is working with members of the victims' families.
Activity at the property where the shooting occurred has been described as "increasingly hostile and volatile in the past three or four weeks".
Neighbours spoken to by the Otago Daily Times said the event was not totally unexpected as activity at the property had worsened in the past three or four weeks.
One neighbour said they had become more concerned over time because the escalating hostility coming from the rental property was impacting on the tight-knit and peaceful neighbourhood.
One person had witnessed two people being loaded into the back of a ute which then drove off quickly in the direction of Southland Hospital shortly after the gunshots were heard.
Neighbours were unsure what may have caused the situation to escalate, as there was no indication or noticeable event, nor any cars coming or leaving prior to the shooting, which may have indicated trouble brewing.
Earlier, a police spokesperson said two people received gunshot wounds and both were flown to Dunedin Hospital.
"Police remain at the address and will be conducting a scene examination this morning along with further inquiries."
Anyone with information about this incident is urged to contact police on 105 and refer to file number 220131/9471, or call Crime Stoppers anonymously on 0800 555 111.
The incident came less than 24 hours after a man was rushed to hospital in Christchurch after suffering a gunshot wound to his hand.
Police received reports of a serious assault about 4pm yesterday on the corner of Warrington and Barbadoes streets.
A spokesperson said officers found one person with a wound to their hand.
The Herald understands it was a gunshot wound.
"Police are currently investigating the cause of the injury."
A St John spokesperson has said they transported a person in serious condition to hospital.
