Irish banks have plenty of scope to increase their mortgage lending in a housing market that looks set to remain robust, according to new research.

A report by Dr Brian Lucey, a lecturer in finance at Trinity College, says that mortgage lenders will be able to grow their business activity through high-interest loans to people with poor credit records - known as "sub-prime" mortgages - loans for investment properties, 100 per cent finance for first-time buyers and equity release loans.

The report, commissioned by mortgage servicing company Homeloan Management Limited (HML), predicts that the favourable economic and demographic factors driving demand for housing will continue.

Dr Lucey said concerns that there may be a housing "bubble" would prove unfounded and that there was little risk of a catastrophic fall in house prices.

This was because growth in house prices in recent years was not out of line with historic trends, he said.

The report also argues that Irish households are coping well with servicing their debts, due to low interest rates.

High levels of inward migration from both "returning Irish" and people from new EU states, combined with strong growth in the numbers of people who fall into the "prime house purchasing age" bracket of 25-44, points to continued expansion in the number of people who are willing and able to purchase properties.

Strong cultural affinity to home ownership provides Irish people with a powerful incentive to buy property, Dr Lucey added.

Low levels of repossession in comparison with countries such as the UK and cultural aversion to stock market investments following widespread losses incurred during the first Eircom flotation have also encouraged this trend, he said.