It's an ignominious end to a great few years for the small - about 3% of the JSE - property sector. Last year, six of its 24 counters appeared in the top 12 performers. This year the top property performer, Premium, languishes in 40th place. What went wrong? Not much, actually, and it's a time of opportunity for contrarians.

Property doesn't fit comfortably into the FM's measure of performance for Top Companies. Two of last year's top six, smallish and illiquid Atlas and CBS, have been swallowed up and mediocre performer iFour is about to disappear as well. The funds that deserved their places last year, Octodec (down from three to 52), Hyprop (down from nine to 107) and Resilient (10 to 85), gave all their shareholders the double-digit payout growth they wanted this year.

Property's poor performance is really about what didn't happen last year. As interest rates rose, the forward yields on the property funds should have risen and their prices should have dropped. This has always happened because property's steady and predictable income streams give a kind of annuity income.

But property yields didn't rise, in fact they fell and share prices rose. Some argued that the revival of the economy, the consequent growth in businesses, the recovery of demand for more space, and the industry's inability to supply it quickly would push rents up by 20%/year for the next five years. This would mean 10%-15% average increases in payouts to shareholders. Dividends were predicted to double in five to seven years. The sector held its price because investors were discounting future income growth.

All of this is true, but it became clear that the market had become momentum-driven - investors were buying in the expectation of higher prices. Demand exceeded supply and capital growth was the main focus. This isn't what property is all about. It is a long-term income investment.

The market has reversed. There are more sellers than buyers. Unit trusts that invest in the sector for retail clients are net sellers, because their clients are moving out of the market, closing the door with a bang - as usual, after the horse has bolted. Short-termism, an obsession with share value rather than income, and an eagerness to panic, dominate the retail investment market.

Institutions aren't exactly diving in to take the slack yet either, partly because of the behaviour of their retail clients and because they can't see the view ahead too clearly either.

Top performer Premium, run by Alec Wapnick, at 1 100c gives a forward yield of about 8%, or R660/month for your R100 000 investment with substantial growth ahead. Bear in mind, though, that this is pretax income, mostly paid out as interest.

This is the opportunity: to buy into steady, predictable income that will grow. Growthpoint's CEO Norbert Sasse sees strong double-digit growth for a few years. Catalyst fund manager analyst Paul Duncan says there could be some oversupply in a few secondary areas "but income growth should exceed even our current high inflation over the next few years".

Retail property income could stagnate over the next few years as consumers adjust to higher inflation and interest rates, but there is every reason why the undersupply of offices and industrial property should continue. Though SA's economy is under pressure, it hasn't moved into recession and employment is rising, particularly in the urban areas.

All of this assures investors of initially high and compounding income growth well into the future, from listed property funds with outstanding professional and entrepreneurial management.

But what to buy? Not all funds are the same. Madison earns its money, not from a property portfolio but the "enterprise value" - share price plus debt - of the listed property funds it asset-manages: Redefine, ApexHi and Hyprop. As their share prices are dropping, there is a danger that analysts may be misforecasting Madison's forward income.