The demand for home loans fell against expectations of a rise in December, according to the Australian Bureau of Statistics.
The data showed the number of home loans granted in December fell a seasonally adjusted 1.9 per cent to 51,692.
Bloomberg had expected the number of housing finance commitments to lift by 0.7 per cent in the month.
However, total housing finance by value rose 0.2 per cent in December, seasonally adjusted, to $27.050 billion.
CommSec economist Savanth Sebastian said the fall in the number of housing commitments in December was consolidation after a year of solid gains.
"The value of housing finance was up about 15 per cent on a year ago," he said.
"It really does suggest that the housing sector is the shining light of the Australian economy."
Mr Sebastian said he was encouraged by the 0.4 per cent lift in the number of new loans approved to build new homes.
"That's the key area to look at, it suggests that construction activity will be the big driver of the Australian growth story this year," he said.
"Not only does it drive economic activity but it also puts a lid on property price gains, at a time when the Reserve Bank of Australia is hesitant to raise the cash rate because of the weak labour market.
"So more supply coming on board will curb the significant price gains over the past 12 months."
Other data released by the ABS showed that Australian capital city residential property prices rose 3.4 per cent in the December quarter, and were up in 9.3 per cent, in the year to December.
Mr Sebastian said he didn't believe that residential property prices will rise as much in 2014 as they did in 2013.
"Investors will be a lot more circumspect in paying higher prices and towards the end of the year you'll hear more talk from the Reserve Bank about raising the interest rate," he said.
By a staff reporter, with AAP