Climate minister flags end of post-disaster property buyouts at homes’ full value

Tuesday, 11 November 2025

Scenes from flood-hit Awatoto, south of Napier, after Cyclone Gabrielle in 2023.

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Everyone should expect that the way the Government responds after the next extreme weather event will look different to the way in which it has in the past, Climate Minister Simon Watts has told insurers and other executive-level guests.

“It is not the case that support will disappear, when emergencies threaten people's lives, their homes, and their livelihoods,” the minister told the Unpacking the National Adaptation Framework event at Auckland’s venerable Northern Club.

The framework was launched by the Government in October and the event was organised by Suncorp, owner of Vero and majority-owner of the AA Insurance businesses.

“And Government obviously retains the discretion to provide support for genuine hardship,” Watts said. “However, it is not likely to provide financial assistance to homeowners based on a full pre-event property valuation.”

The Government’s position is that the financial consequences of climate change for individual property-owners are different to what they were before Auckland and Hawke’s Bay were deluged with extreme rain and flooding in early 2023.

Climate minister Simon Watts speaks as Auckland councillor Richard Hills and Suncorp NZ chief executive Jimmy Higgins look on.

After those events, similar to the Christchurch red zone buyouts after the 2011 Canterbury earthquakes, many property owners had their homes bought at full pre-disaster value from them by taxpayers and local councils.

But that was not a model that would be repeated under the current Government, Watts signalled, though he acknowledged opposition parties didn’t support everything in the current National Adaptation Framework, the high level plan for how New Zealand adapts to a changing climate, and how the costs of adapting will be shared.

But he thinks future governments of the left will find their hands are tied by a simple lack of money.

“There is a fiscal reality here that we cannot afford to continue just to write cheques in this area,” Watts said.

The longer-term plan under the National Adaptation Framework is for the owners of properties to shoulder the climate risks of owning them, and pay more of a share in the costs of building infrastructure like stop banks to protect them.

The financial costs are already being felt by owners of individual properties.

Watts said in the last five years dwelling insurance had increased by just under 62%, contributing a significant amount to the cost of living crisis.

“About 25% of the cost of living challenge is down to insurance premiums,” Watts said.

But, over time, those costs would rise for some, and Watts had a particular example; a seafront road in the Wairarapa which the Government has been asked to help pay for repairs and upgrades to.

Watts said: “They've got this rural road to 89 houses along the seafront that is basically crumbling into the sea. Half of them are baches, half of them are homes.

Typhoon Kalmaegi swept across the central Philippines, leaving at least one person dead, forcing mass evacuations, and causing widespread flooding and power outages. Residents in Cebu waded through deep waters as emergency crews responded.

“The cost to fix that could be over $100 million,” he said last week.

The local council didn’t have the money, he said.

“We're going to have to have some tough conversations, you know. We can't continue to fix that road,” he said.

The financial consequences for the owners of those 89 homes would be very different if taxpayers funded the road, or if they did not. They may well already be priced in.

“I expect the banks are probably not going to be lending on any of those houses,” Watts said.

Though he didn’t say it, his meaning was clear. It’s hard to find a buyer for a home, if buyers can’t get a mortgage on it.

The example also referenced the most contentious part of the National Adaptation Framework: that those who benefit most from climate adaptation spending, such as improving a stormwater drainage system, should pay most for it.

Watts was not the only politician at the event to speak about the cost impacts of climate adaptation.

Local councils are increasingly taking a climate adaptation approach to planning, attempting to prevent development in places where there is heightened flood risk.

Auckland Council councillor Richard Hills said there was general agreement from people when asked high level questions.

He said most people would say: “Please stop letting people build in floodplains or, coastal areas.”

That is, until they realised that might mean their property was worth half as much as it was a couple of months ago because they, or a future owner, wouldn’t be able to further develop it.

The Government’s plan is to build national hazard data and maps so everyone from buyers to renters to sellers have a complete picture of hazard risks. Watts said the Government has been receiving expressions of interest from local and overseas organisations wanting to build the first part of it: a national flood hazard map to be in place in 2027.

This, like the premiums insurers charge, would send “market signals” to the public.

Some were dubious that the public would be able to understand the data required in the planned great transfer of natural hazard risk from the Crown and councils to the public.

Hills said the data needed to be in language the public could understand, noting that wording in LIMs about flooding didn’t make much sense to many people.

“Somehow we're all going have to figure out how to explain risk for people's safety, but also with what they're purchasing,” he said.

It’s not just buyers who were not getting clear market risk signals, the gathering heard.

A bus travels through flood waters in Auckland during the city’s anniversary weekend flooding. Supplied: Peter Grahame

Hills said after the 2023 Auckland flooding damage was cleaned up, he saw landlords renting homes that had flooded to unsuspecting families.

He said this involved “landlords knowingly… putting renters at risk without them having any knowledge that the house was flooded to two metres in some situations”.

Over time, individual owners and renters would effectively shoulder the financial consequences of their decisions.

Watts saw this as taking place over 10 to 15 years, but he acknowledged it could take longer.

“There is a degree of personal responsibility that needs to be transitioned, and that is a process that as a government we're signalling will be happening over the coming, decades,” he said.

“The reality is that more of these events are going to occur. The frequency and severity is probable to increase,” Watts said.

“The assumption that the Crown will step in in all instances to buy out properties is not something that the Government will be doing in the future,” he said.