House prices in the Republic would have to fall by almost 70 per cent before home-owners would face negative equity, according to research by NCB Stockbrokers.

Its economist, Mr Eunan King, has said that while confidence in the housing market has been shaken by job losses in the technology sector, the fundamentals underpinning the market remain intact. "A correction is under way but the fundamentals haven't changed. Demand for housing is still very strong, while the supply of new residential property has fallen this year," he said.

Mr King insists that house prices will not fall sharply lower, leaving home-owners with mortgages greater than the value of their home.

The average mortgage taken out by a first-time buyer in the Republic is equivalent to around 74 per cent of the price of the property. This has been the norm throughout the 1990s and is viewed as being quite prudent by international standards.

Second-time buyers have greatly benefited from the upward spiral in house prices with their average borrowings falling from around 57 per cent of the value of the property in the early 1990s to 47 per cent in 2000. Mr King believes these factors provide reassurance that a crisis in the market is unlikely.

In 1990, the value of the Irish housing stock was estimated at more than £57 billion.

By last year this had risen 3.5 times, to £196 billion (€249 billion).

Mortgage debt has risen over that period in line with the rate of house price increases, so the ratio of debt within the Irish economy has not risen, according to NCB's research. At the same time, mortgage interest rates fell, easing the repayment burden for borrowers.

Mr King points out that while the recent announcements of job losses in the technology sector will dent confidence, the sector is not a major employer within the Irish economy and so losses will not have the impact of destabilising the housing market.

The rate of growth in house prices has eased this year, but with official figures recording a year-on-year increase of about 16 per cent last month, the trend is still very strong.