Despite no cases of COVID-19 in the entire South Island, it will stay in level 4 lockdown until Tuesday, partly in response to continued traces of COVID-19 in wastewater in Christchurch.

Prime Minister Jacinda Ardern said people may ask why the whole country, especially the South Island, has to stay at level 4 until Wednesday.

She said that will provide the country with some reassurance of the full fourteen day cycle since the first case whilst also ensuring time for test results to come back for contacts of the Wellington cases.

"Thirdly, we did see a positive wastewater result in the South Island, namely Christchurch yesterday," Ardern said.

"As noted by ESR yesterday, it's likely that this is a result of positive cases in a managed Isolation facility but further tests and a few extra days will allow us to better answer that question and those more refined tests over different catchments are underway as we speak."

The move has received a mixed response from those in the South.

In Methven, Peter Wood - who owns and runs Ski Time accommodation - was disappointed and said he assumed the decision was based on the government knowing something he doesn't.

"It doesn't seem very obvious to anybody in the South Island," Wood said.

"We kind of think with no cases down here and with the 14 days almost being up and with the self isolation for the people that were in the North Island we thought level 3 was looking pretty good over the weekend. And then level 2 mid next week or later next week."

In Christchurch, property developer Richard Peebles, whose sites include Christchurch's busy Riverside Market and Little High, said given that not all close contacts have been tested he thinks the move is prudent.

He said level 3 and level 4 don't make a lot of differences for his tenants.

"Level 2 is where it needs to be. I would have probably favoured just keeping us under level 4 until a bit later and then going to level 2. But we don't have a lot of choice here, we have to eliminate this outbreak."

Christchurch Mayor Lianne Dalziel said the decision was at least a move in the right direction.

"A lot of us were a little bit more optimistic that the shift would be quicker. I think it will be disappointing in that regard. There are a lot of people and businesses doing it tough at the moment."

Queenstown Lakes Mayor, Jim Boult, was disappointed by the delayed move to level 3 and wants an indication of when the South Island can move to level 2.

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"I was hoping for more freedom then was announced by the Prime Minister. I guess our hope was that level 3 pretty well straightaway with level 2 next week would have been a good thing.

"I mean, the reality is in our part of the world, very limited activity will be able to take place. So that is going to be really, really tough on local businesses here who are already suffering."

Business South chief executive Mike Collins also said all eyes are on a potential date for level 2.

"It is still quite disruptive to businesses and they can't fully function for a lot of businesses at level 3. But that'll be the next thing that businesses really want to understand. When we know we're going to go to level 2."

In Marlborough, deputy Mayor Nadine Taylor said the region was lucky to have remained COVID-19 free and the announcement was a positive one for the country - south of Auckland.

"We're fairly fortunate we're strongly primary industry based, and so our viticulture, aquaculture, our fishing and our farming have all been able to operate, and in many cases have had to operate.

"We're also being fairly fortunate that despite our big storm event, we've actually been able to get an exemption to keep a lot of our roading repair work underway because it's been critical to some of those isolated Sounds communities."

She said the move to alert level 3 will enable some retail, commercial and hospitality outlets to operate, bringing more movement into the local economy.

Ian Williams, the owner of The Vic Public House and Burger Culture restaurants in Nelson, said they are geared up for contactless deliveries and takeaways from next Wednesday lunchtime following the move to alert level 3.

But for many hospitality businesses, including bars and restaurants who didn't do takeaways, that wasn't the case.

"You can't look at a lockdown like this in isolation," Williams said.

"Following the previous lockdown, which happened at the end of summer so I think businesses had a little bit of cash flow in the bank, that's obviously been followed up by a winter because we're in a seasonal business.

"The summer was not particularly good for us in Nelson. It was quite short. And we didn't have anything like a normal summer as you'd expect."

On top of that, he said hospitality businesses are bracing themselves for next summer, which could be another without any international visitors.