Properties hit by Superstorm Sandy could be purchased by the state and the land turned into open space or floodplains under a $US400 million ($388 million) proposal from New York Governor Andrew Cuomo.

Owners of homes substantially damaged by the storm would be offered the pre-storm full market value of their houses, the New York Times reported.

Those who relocate within their home county would receive a 5% bonus.

Residents in more vulnerable areas could sell their homes for market value plus 10%, even if they suffered little storm damage.

For a few dozen blocks in extreme-risk areas, an additional 10% bonus would be available if every homeowner on the block agreed to sell.

The land may be used for wetlands, dunes or other natural buffers, or turned into public parks, but would not be available for future development.