Lauren Palmer loves most things about her Tangambalanga home built in 2019, but poor water pressure is not one of them.

"As more houses have been built it's just progressively gotten worse," she said.

"When the pressure's bad, especially in summer in that evening time when everyone is getting tea ready, it's terrible."

She has had to buy a washing machine that can operate on lower water pressure, a new expensive sprinkler system barely works and her son's bath takes too long to fill.

"He usually ends up having a tantrum before it's ready so we have given up on that entirely and the bath's now used as storage," Ms Palmer says. 

Another 200 new homes are planned in the Kiewa Valley estate in Victoria's north-east but builder JMP Developments has halted work for four years, refusing to go ahead without a guarantee of acceptable water and sewage services.

"Quite simply, the supply and the capacity is insufficient for the size of the estate," project manager Andrew Stern said.

"We could have substantially developed the balance of the estate over that period of time if we had the appropriate water infrastructure here."

North East Water has since made improvements to the town's short-term water security while identifying $15 million worth of infrastructure needed to cater for growth.

Potential homes dampened

Neighbouring suburb Leneva has a paddock that developer Nordcon Land hopes to put 400 new homes on, but a lack of water and sewerage infrastructure has dampened those plans.

"So we are ready to go here in terms of an approved development plan (but) we don't have the pipes to connect to," planning manager Adam Dyde said.

The company estimates it's unable to build thousands of potential new homes in the region because of this problem.

The need for more water and sewerage pipes at Leneva was identified as early as 2018 in precinct structure plans by the local council, Victorian planning authority and other state government agencies.

North East Water said it was continually reprioritising works to meet demand in growth areas after the pandemic triggered a population boom in the region.

Guy Wilson-Browne, North East Water's planning and infrastructure general manager, said more state government support was needed to keep up with demand.

"I think we would say there needs to be more funding for critical infrastructure, particularly for the next 10 years to cater for growth", he said. 

The corporation expects it will spend about $1 billion over the next 10 years to ensure the infrastructure is there.

"The community can have confidence that we have got a planned approach," Mr Wilson-Browne said. 

"We do know it's needed to cater for growth but I guess to some of our smaller towns I'd say, be patient, the upgrades will come within the next five years."

Pouring water on housing targets

The strain on local water infrastructure comes as the Victorian government works towards its target of 800,000 new homes in a decade.

Its draft housing targets for each local government area are set to be finalised by the end of this year.

Wodonga alone needs to build more than 14,000 new homes by 2051, based on those draft targets.

Local developers are sceptical it can be done with basic infrastructure lacking.

"They will by far under-achieve what they are forecasting and a lot of the problem is due to these infrastructure issues such as water and sewerage.

"Whilst those issues are in existence, then any sort of housing targets that state governments or councils set are just going to miss the mark by a long way."

Mr Dyde shared similar doubts. 

"We know the realities of trying to deliver that sort of volume of housing — it's not realistic unless we can get help and funding to deliver that infrastructure," he said. 

The Wodonga Council expressed the need for substantial ongoing investment for the local water corporation to achieve those targets.

"The accelerated housing targets will necessitate an even greater and more immediate financial commitment", a report to council in August noted.

"North East Water's current long-term planning, based on servicing approximately 400 new homes annually in Wodonga, will need to be significantly advanced to meet the proposed target of 550 new homes per year for the next 25 years."

The Victorian government, which approved an increase in some water corporations' debt caps last year, remains optimistic.

"We have released draft housing targets to local councils and, as part of the housing statement, this is work we will continue with the planning minister, with local councils and of course on the really important issues of essential infrastructure, which is where the water corporations come in," Victoria's Minister for Water, Harriet Shing, said.

Ms Shing said the Essential Services Commission played a role in helping deliver the required infrastructure.

"Independent price-setting processes are guided by the submissions and the information that water corporations provide over that period for which bills will be set into the future," she said.

"That has to necessarily take account of what current and future demand will be for infrastructure."