Wallabi resident Kirby Stanley spotted the phenomenon while going for a walk at around 4pm and quickly darted down to the beach to take a look.

She watched the spout move in from a few kilometres off the coast until it got quite close to land.

While she described it as an amazing sight, she said she also had thoughts of the tornado that caused widespread damage in Lennox Head in 2010 and was relieved to see a similar scenario didn't eventuate in her local area.

"It was so impressive to see but it was a nice relief that it didn't hit the coast," Kirby said.

Bureau of Meteorology forecaster Alex Majchrowski said waterspouts generally dissipated fairly quickly once they reached land.

He explained that waterspouts were non-super celled tornadoes that were produced when a relatively cool air mass formed over warmer sea temperatures, creating an updraft.

He said they weren't uncommon off the east coast of Australia but were less likely to form at this time of year.

"Generally they're more common in late summer and through autumn," he said.

Mr Majchrowski said an upper trough - or pool of cool air - that moved through NSW on Sunday combined with the warm ocean temperatures was the most likely cause of the waterspout.

"When the upper trough came through it brought a lot of instability," he said.

Thunder and lightning was also prevalent off the coast with a brief hail storm battering Lake Cathie and Bonny Hills.

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