More than 153,000 people have used the First Home Owners Boost to buy a house since October last year, according to the federal government.

With the $7000 first home owners grant boosted to $14,000 for established homes and $21,000 for new homes as part of the response to the Global Financial Crisis, the rate of first home ownership has boomed in less than 12 months.

But TD Securities economist Annette Beacher says the boost has created a dangerous market bubble as the grants had merely inflated house prices.

The winding back of the grants from October 1 and tougher lending criteria from banks is expected to prompt first home buyer demand to fall back.

Interest rates are also expected to rise, with some banks predicting an increase from November’s Reserve Bank of Australia board meeting.

Meanwhile, new home sales are soaring to three-and-a-half year highs, with Victoria showing a 21.8 per cent increase in new standalone house sales.

Queensland sales were up 20.9 per cent, WA had a 15.1 per cent increase but numbers fell by 11.3 per cent in NSW and 2.5 per cent in SA.

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