Christchurch Mayor Bob Parker says compensation will be needed in some cases where liquefaction after the Canterbury earthquake-devastated homes.
The 7.1 quake on 4 September caused the ground under and around many homes to turn to silt and slush.
The council had tried to stop some developments but was ruled against in the Environment Court.
Mr Parker says the Government is fully aware it has a role to play around compensation issues.
He told Nine to Noon that about half of Christchurch is susceptible to the phenomenon but that it's too soon to say if some areas should not be built on again.