Tomorrow — October 1 — the grant for buyers of new homes will be reduced by $7000, while those buying established homes will receive $3500 less, in line with cuts spelt out in the May budget.

Purchasers of new homes will be entitled to $14,000 of assistance after the cuts take effect, down from the $21,000 grant paid since last October, when the boost was announced as part of moves to bolster the economy in the midst of the global financial crisis.

Did you benefit from the boost? Are your purchase plans on hold now? Contact us: czappone@fairfax.com.au

O riginally, the boost was due to expire on June 30, but it was extended as part of the Federal budget. And buyers of existing homes will be eligible for only $10,500, down from $14,000.

JP Morgan economist Helen Kevans said buildings approvals and housing finance applications would fall in the medium-term future.

"Over the next three to six months, we’ll see a pullback in some of the data that has been buoyed by the extended first home buyers grant such as building approval numbers," said Ms Kevans. "They’ve been clearly buoyed by the expanded grant over the last few months and have continued to rise."

Housing finance numbers have also been "pretty solid," she said.

Building approvals and finance numbers for August will be released later this morning.

The lower boost remains in place until the end of December. After that, the original, $7000 First Home Owners Scheme grant remains for both new and established homes.

The grant boost has been credited with helping underpin home prices in the under-$500,000 bracket and has lifted home prices overall.

Nationally, home prices gained 1.9 per cent in August and 7.9 per cent so far in 2009, according to RP Data out today.

"I think the stimulus has clearly buoyed demand from first home buyers, and that was its desired effect," Ms Kevans said.