Statistics New Zealand census figures showed Rotorua's population dropped by 621.
The population declined from 65,901 to 65,280 - but still higher than in 2001 when 64,473 people lived here.
Census figures showed 22,600 people from the entire Bay of Plenty region had moved to Australia in the past seven years.
"The real challenge for us in the future is to attract some of these people back home," Mrs Chadwick said.
The international downturn in tourism also impacted on local employment.
"I am in a hurry to see changes that will help reverse this trend.
"I will be bringing together parties from our community who can collaboratively make a real difference.
"We need to do things differently," she said.
The city's population decline bucked overall population figures for the Bay of Plenty which showed the region grew 4 per cent - or 10,362 people - in the same period.
Real estate agent Ian McDowell said there had been little real growth in house sales in the city for the past five to six years.
"It's the hardest and longest recession period I can remember in Rotorua," he said.
"Normally after three years it begins to pick up but it hasn't ... it's been really hard work.
"One month sales are up, the next month sales are down . . . it's frustrating but we are not getting the influx of new people coming here to work. Forestry is quiet and the government departments have scaled back.
He said Rotorua needed a big development project to attract new people. Migration helped growth in Auckland but few migrants seemed interested in moving to places like Rotorua, he said.
Rotorua Lakes High School principal Bruce Walker said the population decline was "not surprising."
The school's roll had increased by almost 200 in the past four years but many were pupils enrolling from other secondary schools in the city, he said.
Whakatane, Kawerau and Opotiki's populations each dropped by around 500 people. In contrast, Tauranga's population grew by nearly 11,000.
