According to a leading economist, Brisbane and Perth could be set to join Sydney in the current apartment construction boom.

Australian Industry Group Senior Economist Julie Toth said a recent surge in multi-residential construction activity in Australia was being underpinned by a combination increases in demand for inner city living and a higher prevalence of investors relative to first-home buyers – albeit with demand from the latter group having lifted a bit.

While Sydney remains the current “hot centre,” Toth said Queensland is “probably due to go next and WA as well.”

“It’s really about population density and demand for housing in a constrained area,” she said. “If everyone wants to live in and around Perth or in and around Brisbane, then something has to give and higher density does generally mean more apartments rather than houses.”

“We have seen that trend in other cities. I think it’s probably their turn.”

Asked about the extent to which overseas investment was driving apartment construction in major cities, Toth said foreign companies and investors have always been active in the high end of the Australian commercial and multi-residential markets and that an absence of firm data means any evidence about increasing foreign demand for apartments was anecdotal only.

“I’ve got my doubts about whether it’s actually stronger than it has been previously,” she said.

Toth’s comments come amid increasing signs of momentum within the Australian apartment building sector, which has seen the number of non-detached housing units approved for construction around the nation jump from 69,097 (seasonally adjusted) in the year to July 2013 to 85,213 in the 12 months to July this year.

For now at least, that momentum appears to be continuing, as Performance of Construction Index data based on a survey of large builders last week showed a surge in multi-residential activity and new orders in August.

Still, not everyone shares Toth’s sentiment regarding Brisbane and Perth.

In its latest quarterly forecast, for example, the Housing Industry Association says it expects a falls of seven per cent and 15 per cent in multi-residential construction starts in Queensland and Western Australia during 2014/15 respectively, albeit with both coming off high bases.

Outside of apartments specifically, the overall Performance of Construction Index rose 2.4 points to nine month highs of 55.0 in August as increases in activity in new orders in housing, apartments and commercial building offset the decline in engineering construction. Any reading on the index above 50.0 denotes improving construction conditions overall.

Toth said the data indicated that continued growth was likely in the near term for building sectors outside of resources.

Housing Industry Association senior economist Diwa Hopkins said the data showed that activity and the pipeline of work within the industry was firming as employment was picking up.