Prime Minister John Key has signalled the Government will help pay for people to move to new subdivisions in Christchurch if their homes are on land that is beyond repair.
About 10,000 homes will have to be demolished, while another 100,000 will need repairs after the 6.3-magnitude quake on 22 February quake, in which at least 166 people died.
Mr Key says some homes cannot be rebuilt because the land underneath them is not stable enough.
Money from the Earthquake Commission and insurance companies can be used to build houses in new subdivisions, but Mr Key says the Government can also help.
He said it should be known within a few weeks which areas of the city are likely to be abandoned permanently.
Mr Key said he cannot name the streets or suburbs yet, as it will be up to geotechincal engineers to make the assessment, but land owners should not jump to conclusions in the meantime.
However, he says damaged caused by liquefaction is so serious that some parts of the city will never be built on again.
Mr Key says the Government would probably not provide the land for new housing, but would look at putting together a package that would allow people to move from one location to another.
Independent geotechnical engineer Steven Roberts says entire streets in eastern Christchurch may have to be bulldozed and the ground beneath them repaired.
Mr Roberts, from Kirk Roberts Consulting Engineers, says the social implications of moving so many people are significant, and the Government will have to look at the current value of the land and determine whether it is worth keeping.
Call for patience
Christchurch Mayor Bob Parker is calling for patience as residents seek answers about whether their damaged sections can be repaired, or whether they will have to move.
Mr Parker also says it is unlikely that one suggested plan - to rebuild the central city on Hagley Park and turn the current CBD into a green space - would work. While he would not completely rule it out, he said it was not being seriously considered.
Earthquake Recovery Minister Gerry Brownlee says it will be up to three months before some Christchurch residents will know whether their land is safe to rebuild on.
Mr Brownlee says it would be unwise to speculate on the number of sections that might be left unusable. Christchurch faced huge problems, but with time the situation would become more man
Commission assessments begin
The Earthquake Commission has begun land assessments and will begin assessing houses from this week.
Mr Key says building supply company Fletcher Construction has begun emergency repairs to houses as part of a $5 million contribution to quake relief.
The Government is looking to bring modular homes into the city from around New Zealand and Australia for temporary housing.
Housing New Zealand and the Department of Building and Housing are collating offers of emergency accommodation and working to provide short and long-term accommodation.
Mr Key says there is more temporary accommodation available than people are taking up.
Christchurch East MP Lianne Dalziel says many residents whose homes have to be demolished would rather re-establish elsewhere than live in temporary accommodation.
Ms Dalziel says she wonders about the future of her own low-lying suburb of Bexley where some residents had only just returned to their houses after the September quake.
Many residents 'willing to leave'
The eastern suburbs, including Bexley, were hard-hit by both quakes and a spokesperson says many residents are ready to leave if the Government will pay them to go.
It is possible the area may have to be abandoned altogether.
Sandra Bordon, of the Bexley Residents Association, says people were told months ago it could be three years before their homes are rebuilt.
Ms Bordon says many people now just want to leave the suburb.
Life in limbo
A Christchurch evacuee says uncertainty over the possible demolition of homes is leaving her life in limbo.
Juliette Harris says her Redcliffs home still has no power or water and has moved on its foundations.
She has taken her three children to Auckland, and enrolled them in a college, while she arranges temporary accommodation.
But Ms Harris says a lack of decision-making over her property is making moving on difficult.
She hopes the house will be red-stickered so she and her family can begin a new life elsewhere.