The Stockland quarterly update was fairly bullish, I thought, for housing and housing development in general.

They mention defaults are up, which is always a worry, but generally speaking inquiries and sales holding up is very positive.

At the end of the day I just can’t get behind the story, that the repricing of mortgage rates won’t weigh more heavily on this kind of data.

We have DXS and LLC in the direct equity sleeve (two of the poorer performing, deeper value names) to give us REIT exposure, although the office sectoral exposure (overhang!) affects those two more than the diversifieds like SGP.

RWC and JHX are far more concentrated into the home/resi section, and are industrials/building materials companies not REITs, but the same thematic/central-question is clearly at play; where do housing volumes wind up in response to the cycle.

RWC posted good quarterly sales, yesterday, however we note that volumes ex acquisitions are effectively zero, and possibly worse in Asia Pac; the good sales outcome was purely a) acquisitions and b) pricing power ex acquisitions.

Still, pricing power is a good thing, and the data suggest that being blanket negative on these types of companies might be the wrong idea.

Circling back to our original point, it is hard to go and buy names that run squarely counter to your macro view.

So, we won’t, without compelling reason (usually value, or a balance sheet that gives rise to quality-value type considerations).

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