Crown to buy 5100 quake-hit Christchurch homes

04:08, Jun 24 2011
Gerry Brownlee, John Key
BIG ANNOUNCEMENT: Prime Minister John Key, flanked by Earthquake Recovery Minister Gerry Brownlee deliver the package.

Today's offer from the Government to buy 5100 of the worst affected insured properties in Christchurch leaves more than 10,000 homes in limbo.

A report released today has divided quake-hit Canterbury into four zones with those in the worst affected residential red zone offered cash to move out.

Earthquake Recovery Minister Gerry Brownlee said the offer would allow people to "cash up and go fairly quickly".

Christchurch earthquake package announcement
ON THE GROUND: Christchurch residents watch the announcement on TV.

However, it has also coded orange another 9000 properties in Christchurch and 1500 in the Waimakariri district where further work is needed before their future could be known.

A troubled New Brighton family are amongst those in an orange zone who are demanding to know how much longer they will have to wait.

Raeann McPherson lives with husband Andrew, son Tyler, 12, and daughter Brook,7,  in one of 17 homes in Wattle Drive which have been labelled orange.


But across the road, neighbour and friend Janet Beard is in the red zone, while the north end of the street, backing on to QEII Park, is classified green.

McPherson does not understand why she and her neighbours, just metres from the Avon River, are the only ones still in limbo.

"I want answers. It's good that they've made an announcement to the definite red zone but how much longer are they going to make us wait?''


It will be seven years before anything can be rebuilt on Christchurch's newly-demarked red zone, Earthquake Recovery Minister Gerry Brownlee says.

Prime Minister John Key said each quake had made a large and complex issue more difficult.

"The Government is committed to getting things right for those people in the worst affected areas," Key said.

Prime Minister John Key said each quake had made a large and complex issue more difficult.

"The Government is committed to getting things right for those people in the worst affected areas," Key said.

The newly-demarked red zone could be built on in three to five years, Prime Minister John Key said.

However Brownlee added that "realistically it will be seven years at the shortest before anything will be rebuilt" in these areas.


The price offered would be the rating valuation that applied before the September 4, 2010 quake, less any built property insurance payments already made.

The values were set in 2007, but Brownlee said values across the country had fallen since 2007 so the offer was reasonable.

Those selling to the Government would also avoid fees, such as real estate agent charges.

Residents would have nine months to either accept the offer or negotiate with insurers themselves.

Those affected would be contacted in the next six to eight weeks.


Opposition MPs have said the packaged left issues unresolved.

Green MP Kennedy Graham said the Government was yet to clarify if residents would be forced to leave, or would face forced acquisition of their land under the earthquake recovery law, if they did not accept the offer after nine months.

It was also unclear how many in the red zones did not have insurance.

Mr Brownlee yesterday said that was an issue that would be addressed later and the first priority was to help those who were insured and had helped themselves.

Meanwhile Labour Waimakariri MP Clayton Cosgrove said the package for residential red-zone property owners should meet the Government's own promises that no one would be worse off and homeowners' equity would be protected.

"Every situation is different."

He said the Government should fund independent, professional advice for homeowners.


Brownlee said it would take time to prepare the documentation.

Those who thought they had made improvements, such as new bathrooms or kitchens, that were not included in the valuation could present receipts for work and that would be taken into account.

Treasury estimated the net cost to the Government would be $485m to $635m once it had received payments from EQC and insurers.

The costs would be met from the $5.5 billion earthquake recovery fund.

Brownlee said the process of putting the package together had been sped up since the June 13 quake which had "a significant effect on the psychology of the greater Christchurch area".

The boundaries set for areas that would be abandoned were "robust" and "very defendable".

He said many of the 5100 would not want to move from the area, so he was confident property values would hold up.

Key acknowledged residents were frustrated by the ongoing aftershocks but believed the government had made significant progress helping those in the worst affected areas "plan their futures".

The government has come in for increasing flak in the wake of the latest earthquake over the length of time it was taking to finalise a response.

The big unanswered question remains what happens to home owners who are uninsured.

Brownlee said "that's something we are going to have to do some work on" but the Government's initial information was that "very few" home owners were in the position of being uninsured.


Engineers have divided the city into four residential zones.

The red zone contained 5000 homes that were not economic to rebuild.

They were in the east of Christchurch along the Avon and related waterways and former waterways and in the beach area of the Waimakariri area.

The orange zone contained 9000 that may be uneconomic to repair and infrastructure damage was unclear.

"We will progressively announce the outcome of investigations in these orange areas over the coming weeks and months," Brownlee said.

In the Waimakariri district engineering work planned would be reassessed.

The priority was to help those who had helped themselves, Brownlee said.

Key said the absolute test was whether land could support buildings.

He said the rateable value represented the best approximation of values before the first earthquake.

"It's not perfect but its the best approximation we have."

To those still waiting, Key said he wanted to "get it right".

Over time some of the orange zone properties would move into either red or green.

"I appreciate we are asking people to have a little more patience."

The green zone contained 100,000 houses and it was the "go zone" for repair and rebuilding.

The white zone had not been mapped yet so was not zoned.

Residents could check their status on a website:


The liquefaction damage was unprecedented around the world, Tonkin & Taylor engineers technical expert Nick Rogers said.

He said things looked "wonky" all around the city.

Rogers said there had been a lot of ground settlement, reducing the thickness of the crust between the surface and the ground water table. It made liquefaction worse and made it harder for the ground to support buildings.

Some areas had suffered a shift, with a clockwise trend around the city in September, but in February land had sunk though in areas such as the Port Hills land had risen.

In the Horseshoe Lake area of Burwood the drop was 1 to 1.5 metres.

Brownlee apologised for the "serious leaks" from the Beehive to some media yesterday.

"They are not to do with me," he told a briefing at the Christchurch Art Gallery.

Labour's earthquake spokesman Clayton Cosgrove said setting the compensation at the pre-September 4, 2010 level had raised some concerns.

Speaking before the detailed briefing this morning, Cosgrove said some residents were worried that the amount may understate the value of their properties and others were concerned that their mortgage may exceed the valuation, leaving them with a big loss.

Canterbury Earthquake Recovery Authority chief executive Roger Sutton said, as well as the landcheck website, people could also ring for information.

On Monday and Tuesday he would attend meetings of 300-400 people at a time in communities.

Those just outside the zone would be able to talk to an engineer about their property.

Key said the up-front cost to the Government was not known, but if the average price was $400,000 then it would cost as much as $2b.

He could not rule out that land returning to residential but that would be on a long time frame.

Christchurch Mayor Bob Parker said 11,000 sections were either available or close to available, another 6000 were in train and a further 6000 would also be available.

"If you tally that up its something like 17,000 and another 6000 potentially available."

ANZ bank has set aside $1b to lend at two per cent below the market rate for a year. The rate will be 3.75 percent and will be offered to those who take the red zone offer and want to buy elsewhere.


* Government offers to buy 5100 properties in worst affected "red zone".

* 9000 houses are in the orange zone and need further assessment but could move into red or green zone. Damage here ranges from moderate to severe.

* About 100,000 houses are in the green zone where repairs and rebuilding can go ahead.

* Payment will be set at the rating valuation as at September 3, 2010, which was set in 2007.

* Red zone owners will be contacted in the next eight weeks.

* They will have nine months to decide or they can take payment for the land and negotiate with their insurers.

* The Government has stopped short of insisting those people sell, but says they will not have services such as reticulated water or sewerage.

* Residents can check the status of their property on

* Treasury says net cost to Government of the 5100 will be up to $635m.