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South Australia's water corporation has cut the number of development approvals for the property sector this year in a move the industry says could delay the construction of desperately needed homes in Adelaide.
A leading industry group has warned SA Water's inability to provide approvals and connections will compound the housing supply woes South Australia is experiencing.
Urban Development Institute of Australia SA (UDIA SA) chief executive Liam Golding said unless there was intervention from the state government, the residential property sector was headed towards a "valley of death".
"What I'm hearing from members right now is that it's incredibly difficult to get even the simplest approvals out of SA Water," he told the ABC.
"The difficulty that that is creating is meaning the possible shutdown of the housing industry across greater Adelaide."
Data revealed to ABC News shows this financial year, SA Water has issued 267 development agreements to property developers around the state.
Only 50 of those have been handed out in 2024.
"We do not have a policy to limit the number of DAFIs [development agreements] we're issuing to developers," an SA Water spokesperson said.
"However, we acknowledge we're not keeping pace with the demands of the industry."
The spokesperson said the corporation's priority was preserving service levels while making sure infrastructure was not "detrimentally impacted by operating it above capacity".
"To ensure service levels for our existing and new customers are not compromised, and to protect the integrity of existing infrastructure, we can only issue a DAFI on the basis that network capacity and services are available," they said.
"Or that the plan to service new allotments has been confirmed and funding is available to deliver a permanent solution.
"The breadth and scale of housing growth – particularly across Adelaide's north – requires us to deliver the largest expansion of our metropolitan water and wastewater network in decades."
Northern suburbs water systems 'extremely constrained'
South Australian Housing Minister Nick Champion said water infrastructure problems had seen some developments stall across Adelaide's northern suburbs, with the sewerage and freshwater systems "extremely constrained".
"We have hit the absolute, the absolute limits of our capacity in the northern suburbs," he said.
"We simply don't have enough sewerage capacity, and we are at the risk of low [water] pressure across the northern suburbs if we do more connections without upgrading the infrastructure."
Mr Champion said sewage tanker trucks were being used across Adelaide's north to pump waste from pipes and truck it to treatment plants like Bolivar.
Property Council of SA chief executive Bruce Djite said the lack of infrastructure was "putting a handbrake" on developing houses in the middle of a housing crisis.
"For a developed country, and a state as wealthy as ours, it is unfathomable that there is not enabling infrastructure," he said.
Mr Golding said the crisis around water infrastructure had not happened overnight and there was no point building in areas without waste services.
"This is a problem that's been building over multiple election cycles, multiple governments and multiple ESCOSA cycles," he said.
The Malinauskas government has made a number of housing policy announcements over the past 18 months, including what it has called the biggest land release in the state's history.
Mr Champion blamed the current problems on the former Liberal government, which was in power when SA Water's last regulatory decision was made by the independent Essential Services Commission of South Australia (ESCOSA) in 2020.
"While previous governments of all complexions bear some responsibility, the Marshall Liberal government really dropped the ball," he said.
It's a suggestion knocked back by Opposition Leader David Speirs, who was water minister at the time of the previous ESCOSA determination.
"It just wasn't on the horizon," he told the ABC when asked about the infrastructure issues.
"This is Labor's problem to fix. They can try and pass the buck, or they can try and govern."
Government preparing 'housing road map'
ABC News first reported on issues with SA Water's network late last year, when as part of its four-year business plan the network warned "accelerated growth" in both the water and sewage networks in Adelaide's north would mean the systems "will be at capacity sooner than originally projected".
Earlier this month, Treasurer Stephen Mullighan told ABC News water bills would be going up, saying SA Water "hasn't been provisioning enough" to get water infrastructure out to the developing parts of South Australia, in particular the greater metropolitan area of Adelaide.
The state government is putting the finishing touches on a "housing road map", which will be released publicly next week.
Mr Champion would not be drawn on how much extra taxpayer money will be required for water infrastructure over and above the next ESCOSA determination, which is due within days.
The decision will set how much revenue SA Water can collect from customers, which will help determine how big bill increases will be starting on July 1.
"It's a big and important effort that the government is putting in [on the housing road map]," Mr Champion said.
"It's not just about water, it's about a whole range of things."
Mr Golding said it would be critical to the state's future.
"If we don't get meaningful action from government, meaningful investment in infrastructure, we could be facing a valley of death for housing construction," he said.
Mr Djite said housing remained the "number one issue" the state was facing.
"Next week's housing road map when the premier will outline what his government's plan is to address the housing crisis, I would argue, that there is no more significant announcement that he'd be making than next week," he said.