Offers to buy properties sent to red zone residents

6:05 am on 20 August 2011

The first offers to purchase Christchurch red zone properties are now in the mail as the Government prepares for what it says is the biggest property transaction in New Zealand's history.

About 6000 homeowners in Christchurch, Kaiapoi and Pines Beach have been told their land has suffered so much earthquake damage that it will have to be abandoned.

Earthquake Recovery Minister Gerry Brownlee told a media briefing on Friday that about 3000 letters of offer were in the mail and residents should expect to receive them by early next week.

The letters contain a personal letter of offer, information explaining the two Government buyout options and advice on seeking legal support.

The Canterbury Earthquake Recovery Authority has increased staffing levels so that up to 200 transactions can be processed each day.

The authority says it should not need to step into the property market in Christchurch to stop land prices getting out of control.

Some 3000 homeowners in Christchurch will be receiving letters. The authority says it is possible that could flood the city with buyers and force it to step in. However, chief executive Roger Sutton is confident that won't be necessary.

"I think we want to see what the market delivers, first of all. Prices will only go crazy if supply and demand doesn't actually meet.

"If more land comes onto the market, some of these consent issues are sorted out, then I think a lot more land will come onto the market and that will help keep the cap on prices."

New land 'unaffordable for many'

An Avonside resident whose property is in a red zone says land should be made available to stop the distortions affecting the city's property market.

Reverend Mike Coleman, who is one of those looking for a new home, says a flood of buyers is distorting the market and pushing up prices.

He told Nine to Noon that the authority should step in to contain land prices. He says it already has the power to acquire land, which would enable red-zoned homeowners to buy affordable properties.

Reverend Coleman says the Government offer based on rateable value is not fair, because of the difference between it and the amount residents will have to pay for new land, and to rebuild.

Many will not be able to get the big mortgage that would be needed to make up the shortfall, he says.

Government offers for Kaiapoi homes 'fair'

Earthquake Recovery Minister Gerry Brownlee says people in Kaiapoi who take up a Government offer to buy red zone homes will not be losing equity.

The Government announced on Thursday that 860 homes in Kaiapoi and 80 in nearby Pines Beach in North Canterbury were designated as red zone houses and are uninhabitable.

Waimakariri MP Clayton Cosgrove says Kaiapoi people have told him they are worried about being offered a price lower than their properties are worth.

Mr Brownlee says 2008 valuations on which the prices are based are very fair and since properties are now worth effectively nothing due to damage to both house and land, owners will not be losing equity.

The chair of Kaiapoi Residents Association, Peter Jenkins, says however that being offered 2008 valuations won't be fair for all.

Mr Jenkins told Morning Report there will be winners and losers in the deal. He says some people's properties were not high-value to begin with, and that will make it difficult for them to buy another property.

Residents uncertain of future

Kaiapoi florist Joan Whillans says the loss of more than 900 houses will be a big blow to the town's economy and every business will notice a difference as red zone residents move away.

The acting principal of Kaiapoi High School, Elizabeth McMeekan, says student numbers are likely to drop, but the full impact of the announcement will not be known until people decide whether to take the Government's offer of buying red-zoned properties.

However, Waimakariri district councillor Neville Atkinson says the town has a strong sense of community, which will help it recover quickly.

Mr Atkinson believes many residents in the red zone will shift elsewhere temporarily, but return to new developments on the edge of the town.