August saw the highest increase in new home sales in three years, as first time buyers rush to secure the First Home Buyers Grant before it is reduced at the end of the year.

Detached house sales rose by 11.8% across the country, while apartments strengthened by 7.5% , according to the Housing Industry Association. Victoria experience the largest increase, with detached new home sales up by 21.8%, followed by Queensland with 20.9% and Western Australia with 15.1%.

New South Wales and South Australia experienced a drop of 11.3% and 2.5% respectively. 

"The boost to new home construction from the tripling of the First Home Owner Grant for new dwellings will be apparent throughout the second half of 2009 and well into 2010,"  HIA chief economist Harley Dale said.

"The stimulus to first home buyers is clearly still exerting a positive impact on new home demand. At the same time there is moderate evidence of a lift in trade-up buyer activity in the new home market, but it is difficult to say the same for investors."