Fringe escapes big increase in water infrastructure costs

Property developers have avoided a significant rise in water and sewerage connection costs for house and apartment developments.

The state's regulatory body that sets prices has released its final review of water rates for five years from next month.

Initially the Essential Services Commission recommended increases of up to 450 per cent for water infrastructure charges in Melbourne's growth areas.

But its final determination ruled there would be a cap on "new customer contributions" of between $2000 and $4000 for brownfield and greenfield developments respectively.

Property Council executive director Jennifer Cunich said that would make housing more affordable.

A big rise in infrastructure charges would have had a "detrimental impact", she said.

Home owners who are customers of Melbourne's metropolitan water businesses - City West, South East, Yarra Valley and Western Water - will pay between $47 and $222 more for an average water bill depending on their provider.

Tenants face rises of between $15 and $148.

"For Melbourne households, there will be a one-off significant increase in the first year," the commission ruled.

After that prices will plateau in line with inflation for the following four years.

Average water bills for home owners range from $848 to $975 and for tenants from $264 to $652.

The commission has set indicative tariffs for the last two years of the five-year regulatory period because of uncertainty about the costs to Melbourne Water of the Wonthaggi desalination plant.

Melbourne Water, which supplies water and sewerage services to retailers, had asked for a 14 per cent rise.