The quake struck at 4.35am local time on Saturday while most people were still in bed, sending panic-stricken residents running into the streets in their pyjamas.
Search and rescue teams scoured the shattered city, and several people were pulled from the fallen structures in which they had been trapped.
Relief workers from around the country were finally able to be flown in after Christchurch international airport was reopened.
The airport had been shut down for several hours while safety inspections were carried out.
Power companies were struggling to restore electricity supplies to as many people as possible before nightfall, when temperatures were expected to dip to a chilly 2C.
The effects of the quake were being felt keenly in a country of only four million people, with many having family or friends living in Christchurch, the second largest city.
Mr Key and two senior ministers flew to Christchurch to see the devastation for themselves.
The Royal New Zealand Air Force plane carrying them circled slowly over the city before landing to give them a better view.
"It is a miracle that no one has lost their life," Mr Key said.
"People have been very, very scared, and the damage is frightening.
"It will be some time before we know the full extent of the damage, but the early indications are that it could run into the billions of dollars."
He identified water and sewerage as critical issues in the coming days.
Mr Key assured local people that they would be supported by the government and said everything necessary would be done to cope with the disaster.
"It is very difficult for people to remain calm when they are subject to such violent physical attack," he said.
"The people of Christchurch have done very well, apart from the odd looting, which is very sad."