A crackdown on the capital's landbankers could be harder than Wellington's mayor thinks.

In his State of the City breakfast yesterday, Justin Lester said he's looking at penalties for landbankers, in a move to free up land for housing.

Lester said there was undeveloped land at the city fringes that could fit 2750 new homes.

But 90 per cent of that land was owned by just two groups, which weren't releasing it for development.

Lester said the council had tried using carrots, and now was ready to bring in the stick.

But AUT construction management professor John Tookey told Mike Hosking it's not that clear cut.

"You can't compel somebody to develop stuff. We live in a free market economy. Unless you actually apply a compulsory purchase order from government or local government."

Tookey said land banking is a difficult term to define, so penalising it isn't that simple.

"Mainly because where do you draw the line? For example one end of the spectrum if you're sitting on a very large section that's subdivisible under the new unitary plan, is that landbanking?"

LISTEN ABOVE AS AUT'S JOHN TOOKEY SPEAKS WITH MIKE HOSKING