Mayor of Liverpool Ned Mannoun said many people in his multicultural area felt there was no empathy for them.
He said many people were feeling distressed by raw footage from Gaza consumed through social media.
Speaking to ABC Radio Sydney, Mr Mannoun said some residents had lost family members.
“People are reporting to psychologists with PTSD-like symptoms,” Mr Mannoun told presenter Sarah Macdonald.
“They’ve got insomnia, low mood, survivor guilt, and they’ve got these sort of intense feelings of sadness and powerlessness.
“They feel like no-one is listening … and nobody is talking about it, because this issue is so charged.”
Mr Mannoun wanted people to start conversations with people from Middle Eastern backgrounds to ask if they were OK.
“They want to know that their fellow Australians care and empathise with them,” Mr Mannoun said.
“We need to move on from selective empathy to really empathise with each other.”
It comes after Hamas militants crossed the fence enclosing Gaza on October 7 and killed 1,400 Israelis, mostly civilians, and abducted more than 200, according to Israeli tallies.
Since then, Israel has unrelentingly bombarded Hamas-run Gaza, killing more than 10,000 people, about 40 per cent of them children, according to regional health officials. At least 174 Palestinians in the West Bank have also been killed, Palestinian Health Ministry figures say.