Rotorua's council is waiting to see what the city's newest geothermal mud pool does next as the ground collapsing is a possibility.
Rotorua Lakes Council geothermal inspector Peter Brownbridge said the immediate danger in the area was of ground collapse and mud flowing and there was some concern a shed on the property was at risk.
"There does appear to be a bit of movement in the foundation."
He described the mud pool as a "violent mud hole" but said there would be no reason for the residents not to move back in if it didn't get any worse.
Brownbridge said the council was told about the mud pool early on Tuesday morning.
"We got a call from the resident saying that she had vibrations and loud noises ... When we came to the property we saw steam venting under pressure from the lip of the bank and mud being ejected from the site."
He said it was the fifth time in his time with council there had been geothermal activity along the bank. A fault line runs along it and every now and then a flow of heat causes the activity.
He said previously it took about 10 weeks for the geothermal activity to die down.
"These events they happen very quickly and just as quickly they die away."
Susan Gedye, who lives at the house with her family including a 12-year-old and 17-month-old, woke up when the mud pool formed and described the moment as feeling like a "big earthquake".
When the shaking went on for more than two minutes she got up to investigate.
"I got up and went to the kitchen and then could just really hear it and just thought something is not right here and looking out the kitchen window and saw this big geyser coming out of the bank it was like a big pile of steam.
"I panicked, it was shaking everything ... I wasn't sure what was going on."
Gedye rang the council and was told she was fine to stay in the house for the night.
"In the morning things had really changed. There was mud flying everywhere, the bank had come away and the engineer said it might be time to go."
There was also a possibility of a sinkhole under the kitchen which could cause the house to fall away.
"There are a few cracks around the place and everything is kind of on a lean," Gedye said.
More than 24 hours after the pool formed mud was still flinging from the bubbling pool and the property was cordoned off.
Gedye said it had been a long night as the ground continued to shake as the mud pool bubbled, a neighbour knocked on the door in the middle of the night to tell them what had happened and the fire brigade turned up at one point.
"I'm just thankful no one was hurt, I'm looking at the positives."
Gedye has gone to stay with family. However she has had to postpone bookings for the beauty business she runs from home.
Mud pool media stand up with Rotorua Lakes Council
GNS volcanologist Brad Scott said there were three possibilities for the mud pool.
It could carry on as it was, it could stop, or it could get worse.
But Scott said he expected it would stop, based on previous instances.
"This is an area where geothermal has been for decades.
"It's traditional behaviour in that area. Every sort of three or four years that bank heats up then kills off vegetation, steam vents form and it quietens down and goes away again," he said.