Hedge Fund Bets Against REA Group

The Australian Financial Review has reported that the Sydney-based hedge fund Bristlemoon Capital has shorted REA Group amid an ongoing housing market slump.

Short selling is a trading strategy in which a trader, predicting an eventual price drop in a particular stock, borrows and sells shares at the current market price, then buys them back once the stock falls.

AFR says Bristlemoon believes investors are underestimating a property slump that has seen house prices fall for six consecutive months, with director George Hadjia suggesting prices will continue to fall into 2027, which is not reflected in REA's company earnings forecasts. Instead, Bristlemoon says REA's new listings volumes could fall by as much as ten per cent in 2027.

Hadjia said "Australia's housing downturns have typically lasted 11 months from peak to trough", which implies that house prices will continue to fall into early 2027.

"These well-hearalded property price declines have shattered confidence in the market, with the widely held view that house prices in Australia only ever go up coming under increasing strain.

"No one can accurately predict what new listings volumes will do, but past downturns in offshore markets show that they can surprise sharply to the downside when confidence deteriorates. [If property transactions dry up, property owners could delay choosing expensive pacakges.] This could make it harder for REA to push through large price increases during a sever downturn."

National home prices have been hit by more than 5 per cent since March 2026, driven by interest rate hikes in Australia. According to the AFR, this means the Australian housing market is set for its steepest decline since the 1980s. Meanwhile, inflation is set to spike, with some economists predicting house price depreciation of up to 15%.

REA Group shares are currently trading at A$156.90, down 28% year-on-year. REA Group will host an investor day on 23 October, during which CEO Cameron McIntyre and other executives will speak to REA's strategic growth and strategic pillars.