The South African property market has, by and large, been able to weather the current international economic downturn far better than many of its European and American counterparts.Iconic real estate will always be in demandAccording to local real estate agents, high end property, such as iconic real estate along the Atlantic Seaboard in Cape Town, continues to defy the doom and gloom of dipping market trends.The Cape Town property market is effectively a tale of two markedly different sectors – the affluent areas, like Camps Bay and Clifton property, and the lower income areas that make up the bulk of the city. The former appears to have bucked the international trend, with Camps Bay and Clifton property, for instance, continuing to command record-breaking prices, while the latter is undeniably feeling the global pinch.Banks reluctant to dole out cashHigh interest rates and the much vaunted National Credits Act have had an impact on prospective buyers reliant on borrowed money. Couple that with the reluctance of banks to dole out cash without sizeable deposits or collateral to cover the finance and it stands to reason why lower income property sales continue to dwindle, albeit at a slower pace than the rest of the world.Those who bought property on a buy-to-let basis are arguably the most vulnerable right now, with an increasing number of tenants unable to meet their fiscal commitments. However, recent interest rate cuts by the Reserve Bank will allow hard-pressed consumers a little breathing space and will hopefully retard burgeoning tenant defaults.Demand for rental property on the riseAlthough the economic climate is still undeniably rocky, the demand for rental property appears to be on the increase and this in turn will have a positive spin on attracting more prospective buyers to the market.The good news for South Africa, however, is that economists are predicting an end to the recessionary blues as early as next year, with an anticipated 5.3% growth in 2010. Couple that with normal cyclical trends in the property market and South Africans can expect positive capital appreciation as early as next year!Lack of liquidity and lower demand key inhibitorsAlthough there are a number of factors that continue to inhibit a full market recovery, including the dearth of liquidity and lower household demand, the South African property market appears to be in remarkably good shape compared to the rest of the world and continues to offer great value, especially for the cash flush.