The New Zealand government says it will offer to buy 5,000 homes in Christchurch that were severely damaged by a series of powerful earthquakes.

Prime Minister John Key told reporters Thursday the homes cannot be rebuilt because they sit on land that is too unstable. He says it will cost up to $500 million to buy out the homeowners.

Christchurch is struggling to recover from the earthquakes, including a 6.3 magnitude quake in February that killed 181 people and reduced much of the downtown area to rubble.

Mr. Key says the total cost of rebuilding Christchurch could reach $25 billion.

New Zealand's second-largest city has been divided into four color-coded residential zones, — red, orange, white and green — based on the type and extent of damage. The worst is the red zone, where the government is offering to buy the 5,000 homes. The orange zone contains another 10,000 homes that may have to be destroyed.

Buildings in the white zone are still being assessed, while the green zone has been deemed safe for rebuilding.