With buyers wary, Argentina’s zombie mortgage market has a long road to revival

In Argentina, cash is king in real estate due to a tiny mortgage market and high inflation fears.

In Argentina, real estate agents have one key piece of advice for potential home buyers: bring cash, big bags of it.

Pro-free-market President Javier Milei is trying to fix the South American country's economy after years of crisis and high inflation. Part of his solution is to encourage banks to revive the moribund local mortgage market.

But buyers and real estate agents say that won't be easy. Argentina's mortgage market is tiny, less than 1% of the country's GDP versus around 30% in Chile, 10-15% in Brazil and Mexico, and 15% in the U.S. Regular cycles of economic uncertainty mean borrowers - and lenders - fear the risk of long-term credit.

"People buying properties in Argentina come with cash, in a backpack or a bag," said Juan Verzero, owner of Buenos Aires broker Succeso Propiedades.

Typically, he said, sellers and buyers get together in locations such as shops or offices to sign the contract, exchange keys, and hand over cash, usually in dollars to defuse inflation and devaluation fears - counting it out on the spot.

"Now and in recent years everything we sell is done without a mortgage," he said. "People come with cash and leave with cash."

Paying in this way locks most people out of the market. "Only those with a very high income, around the top 9% to 10%, are able to buy a house. The rest have to rent," said Cynthia Goytia, director of the Urban Policy and Housing Research Center at the University Torcuato Di Tella.