"We need more people, on average, to live in each dwelling and prices do that," Reserve Bank governor Philip Lowe told a Senate estimates hearing on Wednesday in regards to rising rents.

Everybody's Home spokesperson Maiy Azize hit back at the comments saying share housing was "not the solution to the housing crisis".

"If the governor is serious about tackling Australia's housing crisis, he would join the call for more affordable and social homes - instead of putting more pressure on people who are already paying the price for a broken system," she said in a statement.

READ MORE: What you may have missed from Wednesday's estimates

Appearing before the Senate Economics Legislation committee, Dr Lowe outlined a number of risks to the central bank's task of returning inflation to target as the monthly consumer price index came in at a hotter-than-expected 6.8 per cent.

The head of the Reserve Bank said rents would start to fall when more people formed bigger households by bringing in a flatmate or staying at home with their parents.

The return of overseas migration and a move to smaller household sizes during the pandemic had driven rents to eye-watering levels, Dr Lowe said.

It would take time for new supply to come online to meet the higher demand but high prices would eventually cause people to "economise on housing", he added.

"Kids don't move out of home because the rent is too expensive or you decide to get a flatmate, that's the price mechanism at work," he told the Senate estimates hearing.

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Dr Lowe said rents were a "very significant issue" as the single largest component of the consumer price index.

"They're very important and we're expecting growth in rents and, as measured in the CPI, it'd be kind of around close to 10 per cent."

Taking to Twitter following the hearing, Ms Azize said, "Philip Lowe doesn't get it."

"Young people are living at home for longer than any other generation.

"Working people are sharehousing into their 30s and 40s. Many people on low incomes are stuck in overcrowded homes.

"Lecturing people who are already the system's losers won't help."

- with AAP

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