Queenstown Lakes District Council spokeswoman Meaghan Miller said the owners of the property had been told about the flooding and the matter was in the hands of the police, as the council believed "some sort of criminality" had occurred.
Constable Mike Johnstone confirmed a police investigation would take place.
The flooding is understood to have occurred after an irrigation system was vandalised.
The annual rateable value of the property, which has a holiday home on it, is $1,757.46 and the capital value is $580,000.
An estimated 50m-long by 20m-wide pond of water had built up behind a number of houses in stage 5 of the Meadowstone residential subdivision in Wanaka, by about 3pm yesterday.
A neighbour said the pond had formed yesterday morning and water started running through the property in the afternoon.
Wanaka service centre manager Barbara East said water may have entered the house on the property.
Neither the police nor the QLDC knew when the water flows would be stopped to contain the flooding.
The owners were expected to arrive to visit their flooded property today.
