"The neighbours have been respectful, but they've been in a state of shock, of disbelief and I think that's totally justified, but it is certainly not hysteria," he said.
Mr Wallace will meet with Corrections later this week to ask that the man be housed permanently at Rimutaka Prison.
Maungaraki resident Cushla O'Neil, who has been campaigning on the issue, said they're still taking their petition to parliament to "try to change the legislation around people that are on extended supervisory or public protection orders, that they really shouldn't be held in private residences in communities."
Jane Maltby, Wellington President of the Howard League for Penal Reform, said the decision to remove the paedophile was disappointing, arguing that Corrections' backdown sends a dangerous message and perpetuates stigma.
"Corrections have already said that the sex offender has been in the community for ten years and has not re-offended and you have to take from that that he's not a risk to society," she said.