Work has begun in New Zealand to demolish one of the suburbs damaged beyond repair by the Christchurch earthquakes.

The eastern suburb of Bexley, which was home to hundreds of residents, will not be rebuilt.

The ground beneath Bexley liquefied in the first quake in September 2010, and did so again in February last year, causing houses to subside up to two metres.

A geotechnical review deemed the land unsuitable for rebuilding.

The government says 11 houses will be knocked down in the area in the next month, with more than 5,000 to follow in various other suburbs and new areas will be opened up for residents.

Reverend Mike Coleman with the advocacy group WeCan says it is a sad day for many of the residents, some of whom have received inadequate compensation for their properties.

"The government has explained to the rest of the nation that they believe that everything is fair. But when you actually talk to these owners, it is not fair," he said.

"Many of them are out of pocket by up to $200,000 and have got no way of moving forward."

Last year's massive quake killed more than 180 people.