Quake-hit Kaiapoi residents face $50,000 to $100,000 shortfalls after 940 homes in the earthquake-battered Canterbury town were tagged for abandonment, Labour says.
Earthquake Recovery Minister Gerry Brownlee yesterday announced 860 properties in Kaiapoi and 80 in Pines Beach would be reclassified from the orange zone to the red zone, and will now be abandoned.
A further 220 properties in northern Kaiapoi have been rezoned green, or safe to rebuild, while 70 in western Kaiapoi remain in the orange zone, and require further investigation.
The Government would offer to buy the 940 red zone properties at the 2008 valuations, while a decision on the 70 remaining orange zone properties would be made within the next few weeks.
Waimakariri Labour MP Clayton Cosgrove said Kaiapoi residents at a community event he attended last night had done the maths for their personal situations.
One resident told him she would be $50,000 short under the Government deal, while another said he would be down $100,000.
"The talk was of course that Mr Brownlee had said people's equity would be preserved, Mr Key had said no one would be worse off, well that will be the acid test," Mr Cosgrove told Radio New Zealand.
Mr Brownlee told the broadcaster that people were being offered a fair deal.
"I think losing equity is wrong, 2008 valuations are very, very fair, and so if you are being paid at 2008 valuations when your house is essentially worth nothing, because of the damage to the land and the house, then you haven't lost equity.
"I think the difficulty that some are looking at is the gap between what they will be paid out and what they can buy. Generally there will be an issue there about the ability to replace a house at $300,000 when it might cost $350,000-$370,000 for a new one."
No one had to accept the Government offer.
"The reality is that over the last 12 months since we've had successive earthquake events... a lot of the value of properties was taken out," he said.
"If you want to get on with your life here is an opportunity, it's an offer, and it's a choice as to whether to take it or follow a different course."
People who bought properties after 2008 were likely to be better off as values had dropped in that period and if people went ahead and secured a new property now that would increase in value.
Mr Cosgrove said there were problems with land availability and prices and suggested changes needed to be made to allow land designated part of the airport's noise corridor to be built on.
Mr Brownlee said that might be worth looking at.
He said the local authorities were also considering measures to free up land such as reducing the size of plots required.
"In the end I think the way through this is to ensure that there is enough land available for subdivision to ensure there is no price pressure because of scarcity."