Sydney-based hedge fund Bristlemoon Capital is targeting Australia’s largest real estate listings company, REA Group, betting on an intensified slump in property prices. Led by George Hadjia, Bristlemoon believes investors are underestimating the fallout from the Reserve Bank’s aggressive interest rate cycle and recent budget tax changes. REA Group operates Australia’s premier online property platform. The company earns revenue by charging agents and vendors fees to list properties. REA’s shares have already dropped 15 per cent this year to $156 on the ASX.
National home prices have declined for six consecutive months, falling 5.2 per cent from their March peak due to RBA rate rises and government changes to capital gains tax and negative gearing. Central bank minutes suggested further rate increases, while the International Monetary Fund warned of high inflation for Australia. Economists are downgrading housing forecasts, with AMP predicting a peak-to-trough decline of up to 15 per cent. Hadjia noted that past Australian housing downturns typically last around 11 months, implying price falls could continue into early 2027 and challenge investor confidence.
Bristlemoon Capital argues that REA Group’s earnings expectations require significant revision. While REA forecast new listings to be flat to down by low single digits in FY27, Bristlemoon anticipates a sharper decline of 5 to 10 per cent in listing volumes. This could trigger a near 40 per cent plunge in REA’s share price to below $100. Conversely, Jun Bei Liu of Ten Cap maintains a long position, believing REA can offset softer volumes through price increases and enhanced products. Other investors suggest weaker markets might prompt owners to buy more expensive listing packages; however, Hadjia counters this could be delayed. Bristlemoon points to REA’s current lofty price-to-earnings ratio of 26 times, arguing it’s too high given market risks, and projects a core earnings fall with a PE multiple contraction to 20 times, supporting their $98 share price target.
