No Compensation For ‘Worthless’ Quake Homes – Updated

Today’s newspaper The Press is carrying an article that says that the owners of some earthquake damaged houses in the Christchurch area will receive no compensation for the drop in value of their homes.

The situation is leaving some people with mortgages that are greater than the value of their homes.

To add insult to injury many of them are finding it impossible to get insurance cover for damaged homes that were built on remediated land – effectively making their properties worthless.

Key told the paper

“”…The Government’s responsibility via EQC is to restore people’s positions to the situation they were in prior to the earthquake. Inevitably, if there are changes in property values that’s not something the Government, by and large, can be held accountable for…”  Read the full report here

We think this is manifestly unjust.

Firstly the owners bought/built their homes in good faith on land that had been released as suitable for building. If the land was unsuitable for purpose the developers and council should between them bear the cost of the homes’ devaluation.

Secondly, if that fails the Earthquake Commission should compensate for the whole cost of the property, so that, if they chose to, homeowners can walk away from the mess and build new in a location that is more suitable.

Action for Christchurch East Facebook Group

Residents have formed together in various groups to put pressure on the authorities to engage in more consultation prior to the release of a long awaited geotechnics report, due sometime this week.

The report has the potential to negatively affect house values and rebuilding aspirations in affected neighbourhoods. Many people want to stay and rebuild their homes if the land can be repaired.

They are also in the extremely difficult position that most of them are still waiting to be assessed, well over a month after the quake (whilst heritage properties in the CBD took priority) Those people “DO NOT qualify for financial assistance from either the mayoral fund, red cross, winz, or the massively publicised “earthquake fund“. Of the latter, only a small fraction of it has actually been allocated.

Only 10% of the $14 million raised has been handed out so far. The number of applications was only 30 to 40 %. Is it any wonder? people are still waiting to be assessed. Money is still pouring into the fund.

Time Bomb

House building on remediated land, or ground that is subject to liquefaction, is gearing up to be New Zealand’s next ‘ leaky homes’ time bomb unless the government gets a grip on this issue now and protects and reassures property owners.

See also blog – Liquefaction in Christchurch, 9 September 2010

Readers of this blog left the following comments about that post:

Eve Newton

“I also have a copy of this map, it was given to me by the previous owner owner of our house nearly five years ago along with a map of where the old Waimak used to flow and yes branches of it flowed through Christchurch and Kaiapoi. I believe, looking at the map that the river still flows underground through it’s old route and is popping up as springs feeding the likes of the Avon, the groynes etc. It’s interesting to note that this route has a close resemblance the the map you have shown. My father was a bulldozer operator back in the 50′s 60′s and he remembers bulldozing Kingsford Street in Christchurch. This street is a disaster. He said he couldn’t believe they built there because when they dug to put the drains in it was like runny sand and they spend a lot of time draining it before bring in truck loads of shingle. Someone told me that someone in the council at the time advised against building there at the time, but they went ahead anyway.

C Pasfield
“I am from Kingsford Street and I totally agree with your “runny sand” comment. We’ve just had our drain pipes repaired. The contractors dug 6-7 feet down to replace the broken pipes but said they could not compact the ground very well afterward as it was mostly sloppy sand! 80% of our property was affected by liquefaction!”

P Ray
“Decisions going against common sense are usually greased by sheets of money…”

Location of Kingsford Street, Christchurch

An account of the quake by a resident in Kingsford Street was published on Stuff.  She tells of dozens of geysers spewing out water as the earthquake liquefied the ground:


“As soon as we woke, there was no doubt that this was a massive earthquake. Every time we moved to the north, our house tilted forwards, and wouldn’t recover as we moved back to the south. We assumed that we were falling off our piles (we later discovered that the whole house was sinking into the earth due to the liquefaction).

When the shaking, rumbling and rattling ended, we were horrified to hear a loud gushing and gurgling of water – as if a river had been diverted through our property. We rushed to turn off the hot-water cylinder, thinking it had sprung a leak, but the sound didn’t go away.

When we peered out the window (the power and street lights were off) we saw dozens of geysers spewing out fountains of water.

We hauled on clothes (not easy when you’re shaking like a leaf), grabbed the trusty dynamo torch from beside the bed, and tried to get outside to check on our neighbours. The front and back doors were jammed shut, but we managed to escape through the conservatory. We waded our way along the neighbour’s driveway, which was ankle deep in mud and water.

We enjoyed a nice cup of tea, boiled on a gas stove, with the neighbours while we waited for sunrise.

The workmen have been absolute legends – working their butts off while their own homes and families needed attention. We are incredibly grateful!

Now we are waiting to hear whether our homes can be saved, or whether our land will be declared unfit to be built upon.”


One thought on “No Compensation For ‘Worthless’ Quake Homes – Updated

  1. Caveat emptor.

    The responsibilities of the EQC are very clearly defined. Insured homes will be rebuilt if possible, and if the land is deemed unsuitable for building on, the homeowner will be compensated for with a minimum sized land section.

    This is a very fair system indeed, much fairer than in many other countries. For instance, in California, my brother cannot get earthquake insurance at all!

    The government has no responsibility to compensate for loss of house price value after a natural disaster.

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