Average South Australian household water bills will increase by $80 each year to help pay for $1.5 billion worth of new mains water and sewerage connections to rapidly-growing Adelaide suburbs.

SA Premier Peter Malinauskas said the bill hike, to come into effect from July 1, would address a "major underinvestment in water infrastructure", which he said was holding back the construction of new houses.

The SA government will also spend $440 million on new water infrastructure, and restructure developer augmentation charges, to ensure SA Water can cater for housing demand.

"We're calling on households who can't afford much to pay a little bit more for their water bills," Mr Malinauskas told a crowd of just under 1,000 property sector representatives.

Mr Malinauskas said the government needed to spend $1.5 billion over four years to ensure SA Water could service a potential 40,000 new allotments across the state.

He said $300 million of that had already been allocated to SA Water, but the government needed to find an additional $1.2 billion.

Opposition spokesperson Michelle Lensink said she was "concerned" that water bills would increase during a cost-of-living crisis.

"There's also small businesses closing, so it's an issue for all South Australians."

Bills to increase above inflation

From July 1, household water bills will increase by 3.5 per cent above inflation, or about $20 a quarter.

That increase is in line with a SA Water business proposal submitted to the state's Essential Services Commission (ESCOSA) late last year.

Mr Malinauskas said if SA Water customers were to foot the entire $1.5 billion bill to build new water infrastructure, their bills would have increased by $440.

"You can imagine how loath we are as a government to see any increase above CPI on water bills," he said.

"But, because of the government contribution of $440 million and because of the augmentation charge and that contribution, we can ameliorate the impact down from 32.5 per cent above CPI to 3.5 per cent above CPI.

"You can imagine how unenthusiastic we are about having this imposition on hardworking people and families in a cost-of-living crisis."

Mr Malinauskas said the government would introduce additional water bill concessions, with details to be announced on Wednesday.

Developer charges to change

Developers will also face changes to water augmentation charges.

From July 1, charges for greenfield developments would be capped at $10,000 an allotment.

Developers would have to pay $2,500 for infill developments from next financial year, with that charge to increase to $10,000 by 2027-28.

Apartments, built-to-rent, community and not-for-profit housing developments would be exempt from the augmentation fees.

Currently, developers pay augmentation fees on a "user pays" model, with the government forecasting charges to increase by between $50,000 and $240,000 an allotment.

"We're providing a degree of certainty in the market to help unlock investment," Mr Malinauskas said.

'At the endgame'

ABC News first reported on issues with SA Water's network late last year, when 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".

SA Water has already cut the number of development approvals for new homes in Adelaide — a move the housing industry has warned could lead to a construction "valley of death".

Mr Malinauskas said the government had been "shocked" to learn of the amount of additional water infrastructure needed to cater for future housing demand.

He said previous governments of "all political colours" were to blame for the lack of investment.

"We have a major underinvestment in water infrastructure – not just in metropolitan Adelaide, but also in regional communities as well," he said.

"We are at the endgame."