Earthquake Recovery Minister Gerry Brownlee says he expects homeowners in Christchurch's red zone should start getting a formal offer to buy their properties within the next eight weeks.
The Government has announced it will offer to purchase 5100 homes, at their 2007 rateable value, in the newly announced residential red zone.
These properties are in the suburbs worst affected by the earthquakes. They are located in the east of Christchurch, along the Avon River, in the north-east of the city such as Brooklands, and in the beach area of Waimakariri District, such as Kairaki Beach.
Owners could also choose to sell the land only and continue to deal with their insurance company to get their house replaced.
Mr Brownlee says he understands many people will not want to leave, but damage in suburbs such as Bexley will take years to fix.
"That land needs significant remediation and a plan needs to be put together for that."
Mr Brownlee believes it will be a decade before the land is fully repaired.
Three other residential zones were announced on Thursday. In the orange zone, comprising 10,500 properties in the Christchurch City Council and Waimakariri District Council areas, further assessment is needed.
Properties in the residential white zone have not been fully mapped or are not residential, while in the green zone, there is no significant land damage and repairs or rebuilding can begin.
'Complex' insurance situation
New Zealand's largest general insurer, IAG, says the likelihood that homeowners in Christchurch's residential red zone could get a financial advantage by negotiating with their insurers will depend on their individual policy.
The chief executive of IAG, Jackie Johnson, says policies differ widely and it is a complex situation.
She said it is important that people understand the insurer's obligations, and get professional advice.
Residents fear financial disadvantage
Some Christchurch residents say the Government's deal will leave them out of pocket.
Horseshoe Lake resident Gail Pringle told Morning Report that valuations based on 2007 information are out of date. She says residents ar already facing tougher financial circumstances, having less income since the quakes.
Lynn Ball from the Bexley Residents Association says the situation is grim for many people. "There's no houses, there's no land on the east side of town and most people will be at a financial disadvantage," she says.
Ms Ball says when new properties are developed, they just won't be affordable.
However real estate firm Colliers International says the Government's valuations are fair, as there was a peak in the market around the time of the 2007 valuations and since then the global financial crisis has hit.
While the housing sector has risen again, if anything, the valuations may well be ahead of the market at the moment, the firm's valuation and advisory director Gary Sellars says.