Low-income renters in Hobart or Townsville are just as important to the government as Sydney home buyers, insists Treasurer Scott Morrison.
Mr Morrison is putting the finishing touches to his second federal budget which will be delivered on May 9.
One of the features of the budget will be a package of measures to deal with housing affordability, the rental market and public housing.
Speaking to reporters in Canberra on Monday, the treasurer underlined the broad scope of what would be presented in the budget.
"I know that so much of the commentary and the analysis of the issue focuses on house prices in Sydney," Mr Morrison said.
"I'm just as concerned about someone on low incomes living in Hobart who can't afford their rent, or in Adelaide or in Perth or Darwin or Townsville."
Work is under way in consultation with the states on how to better spend the $11 billion set aside for social and affordable housing and leverage more investment in the sector.
It's also expected the government will point to its "city deals" as an example of how local, state and federal governments can cooperate on land development, transport and services.
Mr Morrison said he also empathised with the frustration of young home buyers facing high prices.
"If you live in Sydney it's been like that for generations," he said.
"My grandparents - all they ever knew on my father's side was renting a house in Sydney - could never buy a house ... so it has been a long term issue in Sydney."
Economist Chris Richardson said the federal government itself could not make housing more affordable.
"They can do sensible things around housing - they really can, and they should - but we shouldn't let Australians think that governments can solve housing affordability," he told ABC radio on Monday.
"At $6.5 trillion, that is Australia's largest market, and it's a wicked problem to fix."
An interest rate rise would make an impact, but was a "big lever".
"If interest rates were to go up one per cent, and at some stage they'll have done that, compared today to perhaps the end of 2018, that would cut about seven per cent from housing prices."
The latest CoreLogic home value index for April showed dwelling values increased by 0.1 per cent across the combined capital cities in April, with housing market conditions slowing in both Sydney and Melbourne.
Over the three months to April, Sydney was the most expensive city with a median dwelling price of $860,000, and Hobart was the most affordable at $363,200.
