Australian hedge fund Bristlemoon Capital has taken a short position in REA Group, betting that a downturn in the country’s housing market could weigh on the property listings company’s earnings, according to a report by the AFR.

The fund, led by George Hadjia, sees scope for REA shares to fall towards A$98, implying downside of almost 40%. Bristlemoon expects new listings to decline by 5% to 10% in FY27, compared with the company’s guidance for flat to slightly lower volumes.

The bearish thesis centres on the risk that weaker housing activity and lower earnings expectations could trigger a reassessment of REA’s valuation. However, bullish investors argue that the company’s market dominance, pricing power and product innovation could help offset a slowdown in property listings.