"I grabbed it [his hand] and squeezed it to stop the bleeding."
After waiting for 10 minutes the neighbour said someone from across the road offered to drive the boy to hospital.
Coastguard training manager for coastal boating education Steve Crockett said it was not normal for boat flares to be kept inside houses.
"That would be like saying it would be normal to keep a firearm in a bedroom," he said.
Boat flares, which become unstable when they are damp, should be stored in a waterproof container on a boat.
Mr Crockett said boat flares, which are made up of chemical components such as gun powder and magnesium, are essentially pyrotechnics that burns at intense heats.
"They are very, very hot and they're not something that should be played with."
While they have plenty of hazardous warnings Mr Crockett said he wouldn't expect younger people to fully understand the danger and that they may even have mistaken the flare for a firework.
"That's really tragic that this has happened. It's the sort of thing that should have and could have been prevented," he said.
The neighbour said the group of children were often seen playing on the road.
"They're on the road daylight till dark ...The kids should have been at school."
"You don't want for these sorts of things to happen but you do because then it can be someone else's problem."
The neighbour said they thought there was an adult, who wasn't the boy's parent, in the house at the time of the incident who had also called the police.
A police spokesperson said they received a call from the hospital at 12.40pm and had been making enquiries at the address.
Yesterday afternoon a hospital spokeswoman said the boy was in a stable condition.