The housing market retreated again in the first month of 2012 following its strong showing in December though economists have been upbeat that the rest of the year would witness some form of recovery as investors' confidence regain enough traction.

The Australian Bureau of Statistics (ABS) reported on Tuesday that financing activities in the sector shrunk by 2.3 percent in January to $20.732 billion, seasonally adjusted, after the rally posted in the previous month.

CMC Markets chief market strategist Michael McCarthy told the Australian Associated Press (AAP) that what was seen in final stretch of 2011 merely showcased the market reaction to the consecutive rate cuts rolled out by the Reserve Bank of Australia (RBA) in November and December.

Investment lending in the month, McCarthy said, jumped by 7.5 percent as "some investors who'd been sitting on the sidelines scrambled in on the basis of a better interest rate environment leading to higher house prices."

He added that once the excitement fuelled by RBA's move had died down "it's not surprising that we've seen a bit of a reversal," of the scramble, which the market has expected to begin with.

Almost as expected was the slide in the number of home loans approved in January, which the ABS said dipped by 1.2 percent to 47,768, coming from the 48,370 approvals, downwardly revised, registered in December.

The slight decrease detracted from the flat forecasts earlier pitched by many economists but Commonwealth Bank senior economist Michael Workman is convinced that the latest data is not headed to further worrisome points.

Workman allowed that some sort of pick-ups may have been expected by the market in light of the rate cutbacks implemented by the RBA that pushed down the cash rate at 4.25 percent.

"In a general sense, we're still looking at a very gradual pick-up in lending into the housing market as a result of the interest rate cuts, but it's quite slow," Workman told AAP.

While noting that the decline was the first in the past 10 months, Workman stressed that the latest ABS data was unlikely to bring more concerns for the central bank.

"I think the moderate pace of approvals in home loans is probably one of those things the Reserve Bank wouldn't mind too much given that the level of construction activity remains relatively weak," the analyst explained.

On the other hand, the market should achieve some turnaround this year as McCarthy predicted that property investors would grasp the latest data as simply moderating signals and not of underlying weak points.

Confidence in the market would most likely get a boost this year, McCarthy said, adding that "while we're not expecting investors to get carried away, we would expect them to return to the property market over the course of this year."

Those elements, he added, should paint a recovery picture for the housing market this year.