The Federal Government has ruled out any changes to negative gearing despite calls from the New South Wales Liberal Government to ease housing affordability.

New South Wales Planning Minister Rob Stokes has broken ranks with his federal colleagues, accusing them of falling prey to "a Canberra culture that promotes opposition over consensus".

His comments have been welcomed by the Federal Labor Party but dismissed by senior Government ministers, who warned any changes could have negative impacts.

Sorry, this video has expired Planning Minister Rob Stokes argues against negative gearing

Prime Minister Malcolm Turnbull said land supply was the key influence on housing affordability, rather than negative gearing tax exemptions.

"What we are working to do — and we are working with the state governments now to do — is to zone for more density, more affordable housing," he told 3AW Radio.

"The critical thing to do is to build more dwellings."

Treasurer Scott Morrison said the Government needed to consider how negative gearing would impact the entire nation and not Sydney alone.

"What might help in Pittwater may not help in Tasmania. In fact, it could actually have a negative impact because there is no one, single housing market," he said.

The Treasurer said he understood Mr Stokes was focused on Sydney, but he would focus on a comprehensive approach to housing affordability.

"There is no one issue that addresses this and anyone who pretends that really hasn't got across the full set of issues, and I think it is important we walk together," Mr Morrison said.

"Let's not forget that the overwhelming majority — some eight out of 10 people who buy investment properties — are not millionaires or wealthy property investors."

Finance Minister Mathias Cormann rejected Mr Stokes' call and said state governments were responsible for housing supply, not the Federal Government.

"The Commonwealth is always very keen to work with them but the suggestion that somehow increasing the taxes and making rental affordability less affordable is the right way to go … we completely reject," he told Sky News.

Labor backs 'recognition of reality'

Labor's Shadow Treasurer Chris Bowen welcomed the New South Wales Government's "recognition of reality" and called on the Treasurer to follow its lead.

He called on the Federal Government to "swallow its pride" and accept that negative gearing reforms were necessary to give young Australians hope, to repair the budget and to address housing affordability.

"First home buyers rates are at record lows, investor rates are at record highs," he said.

"Right around Australia, young people are looking at the great Australian dream and seeing it slip through their fingers."

Mr Bowen said voters understood the time for negative gearing reforms was "well and truly here".

"Today should be the last day that [the Federal Government] continues to refuse to listen to sensible contributions on negative gearing reform, including from their own party."

Focus on equality

In a speech to the Committee for Economic Development, Mr Stokes called on the Federal Government to focus on equality of opportunity for all homebuyers.

He said the NSW Government was willing to have a discussion about tax reform earlier this year and said he was disappointed by the Federal Government's policy position.

"Disappointingly our leadership on this issue fell victim to the Canberra culture that promotes opposition over consensus," he said.

"It's a major concern to me as Planning Minister of the most populous state, but also as a dad to three young children, of increasing reports that without parental support the dream of home ownership is becoming harder and harder to obtain.

"Surely the focus of the tax system should be directed towards the type of housing we need. Why should you get a tax deduction on the ownership of a multi-million-dollar holiday home that does nothing to improve supply where it's needed?"