Key Takeaways
- • Sydney-based hedge fund Bristlemoon Capital has taken a short position in REA Group, according to the Australian Financial Review, betting that a housing market downturn will weigh on the property portal operator's earnings.
- • Bristlemoon director George Hadjia argues investors are underestimating the slump, with house prices down for six consecutive months and expected to keep falling into 2027.
- • Bristlemoon believes REA's new listings volumes could fall by as much as 10 per cent in 2027, a risk not reflected in company earnings forecasts.
- • National home prices have fallen more than 5 per cent since March 2026, driven by Australian interest rate hikes, with some economists forecasting declines of up to 15 per cent.
- • REA shares trade at A$156.90, down 28 per cent year-on-year, and the company holds an investor day on 23 October 2026 with CEO Cameron McIntyre.
Summary
The Australian Financial Review reports that Sydney-based hedge fund Bristlemoon Capital has shorted REA Group, the operator of Australia's largest property listings portal, amid an ongoing housing market slump. Short selling involves borrowing and selling shares at the current price with the aim of buying them back at a lower price after a decline.
According to the AFR, Bristlemoon believes investors are underestimating the depth and duration of the property downturn. National house prices have fallen for six consecutive months, and the fund's director, George Hadjia, expects prices to continue falling into 2027. He argued that Australian housing downturns have typically lasted 11 months from peak to trough, which would imply further price declines into early 2027. Bristlemoon contends that this outlook is not reflected in REA's earnings forecasts and that the fund expects REA's new listings volumes could fall by as much as 10 per cent in 2027.
Hadjia said the widely held view that Australian house prices only rise is under increasing strain, and that listings volumes can fall sharply when confidence deteriorates, as seen in past downturns in offshore markets. He argued that if property transactions dry up, vendors may delay purchasing premium listing packages, which could make it harder for REA to push through large price increases during a severe downturn.
The AFR reports that national home prices have declined by more than 5 per cent since March 2026, driven by interest rate hikes in Australia, and that the market is set for its steepest decline since the 1980s. Some economists are predicting house price depreciation of up to 15 per cent, while inflation is also expected to rise.
REA Group shares were trading at A$156.90 at the time of reporting, down 28 per cent year-on-year. The company will host an investor day on 23 October, where CEO Cameron McIntyre and other executives are scheduled to discuss REA's strategic growth and pillars.
According to the AFR, Bristlemoon believes investors are underestimating the depth and duration of the property downturn. National house prices have fallen for six consecutive months, and the fund's director, George Hadjia, expects prices to continue falling into 2027. He argued that Australian housing downturns have typically lasted 11 months from peak to trough, which would imply further price declines into early 2027. Bristlemoon contends that this outlook is not reflected in REA's earnings forecasts and that the fund expects REA's new listings volumes could fall by as much as 10 per cent in 2027.
Hadjia said the widely held view that Australian house prices only rise is under increasing strain, and that listings volumes can fall sharply when confidence deteriorates, as seen in past downturns in offshore markets. He argued that if property transactions dry up, vendors may delay purchasing premium listing packages, which could make it harder for REA to push through large price increases during a severe downturn.
The AFR reports that national home prices have declined by more than 5 per cent since March 2026, driven by interest rate hikes in Australia, and that the market is set for its steepest decline since the 1980s. Some economists are predicting house price depreciation of up to 15 per cent, while inflation is also expected to rise.
REA Group shares were trading at A$156.90 at the time of reporting, down 28 per cent year-on-year. The company will host an investor day on 23 October, where CEO Cameron McIntyre and other executives are scheduled to discuss REA's strategic growth and pillars.
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