Key Takeaways
- • Sydney-based hedge fund Bristlemoon Capital has taken a short position in REA Group, according to the Australian Financial Review, betting on a deeper housing market downturn.
- • Bristlemoon director George Hadjia expects house prices to keep falling into 2027, arguing that consensus earnings forecasts for REA do not reflect this risk.
- • Bristlemoon projects REA's new listings volumes could fall by as much as 10% in 2027.
- • National home prices have fallen more than 5% since March 2026 after interest rate hikes, with house prices down for six consecutive months.
- • REA Group shares trade at A$156.90, down 28% year-on-year, and the company holds an investor day on 23 October.
Summary
The Australian Financial Review has reported that Sydney-based hedge fund Bristlemoon Capital has shorted REA Group, the operator of Australia's largest real estate listings business, 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 severity of the property downturn. House prices have fallen for six consecutive months, and director George Hadjia suggests prices will continue to fall into 2027. Hadjia noted that Australian housing downturns have typically lasted 11 months from peak to trough, which would imply further declines into early 2027. He argued that this outlook is not reflected in REA's earnings forecasts. Bristlemoon instead expects REA's new listings volumes could fall by as much as 10% in 2027.
Hadjia said confidence in the market has been shaken, with the widely held view that Australian house prices only rise coming under strain. He added that new listings volumes are hard to predict but can fall sharply when confidence deteriorates, and that a drop in property transactions could lead owners to delay purchasing expensive listing packages, making it harder for REA to push through large price increases during a severe downturn.
National home prices have fallen by more than 5% since March 2026, driven by interest rate hikes in Australia. According to the AFR, the housing market is set for its steepest decline since the 1980s, and some economists forecast house price depreciation of up to 15%.
REA Group shares are currently trading at A$156.90, down 28% year-on-year. The company will hold an investor day on 23 October, at which CEO Cameron McIntyre and other executives will discuss its strategic growth and pillars.
According to the AFR, Bristlemoon believes investors are underestimating the severity of the property downturn. House prices have fallen for six consecutive months, and director George Hadjia suggests prices will continue to fall into 2027. Hadjia noted that Australian housing downturns have typically lasted 11 months from peak to trough, which would imply further declines into early 2027. He argued that this outlook is not reflected in REA's earnings forecasts. Bristlemoon instead expects REA's new listings volumes could fall by as much as 10% in 2027.
Hadjia said confidence in the market has been shaken, with the widely held view that Australian house prices only rise coming under strain. He added that new listings volumes are hard to predict but can fall sharply when confidence deteriorates, and that a drop in property transactions could lead owners to delay purchasing expensive listing packages, making it harder for REA to push through large price increases during a severe downturn.
National home prices have fallen by more than 5% since March 2026, driven by interest rate hikes in Australia. According to the AFR, the housing market is set for its steepest decline since the 1980s, and some economists forecast house price depreciation of up to 15%.
REA Group shares are currently trading at A$156.90, down 28% year-on-year. The company will hold an investor day on 23 October, at which CEO Cameron McIntyre and other executives will discuss its strategic growth and pillars.
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