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.

In an attempt to tap into middle-class dreams of home ownership, there have been new mortgage launches this year. Local banks Banco Nacion and Banco Galicia pledged billions of dollars of mortgage loans, adding 4.5%-8% interest on top of an official inflation-linked index.

Fabian Kon, General Manager of Banco Galicia, told Reuters the bank had received tens of thousands of initial queries, but said ultimately most chose not to take on the financial risk.

“The problem is inflation, not the mortgages. If you have 200% inflation, people get scared,” he said.

“(The market) could make a comeback. What does it depend on? That there really will be no inflation in Argentina for many years, that we won’t again have an explosive situation where someone who has a loan is scared of what could happen to them.”

In May, only 141 houses were sold with mortgages in capital Buenos Aires, edging up from 134 a year earlier, the college of notaries said in a report. In the first five months of the year it was 509, down from 515 in the same period in 2023.

A Reuters reporter went to nearly a dozen real estate firms in June and July. None said it had assisted a local buyer in acquiring a home with a new loan this year.

‘I don’t trust banks’

Argentina’s economic track record doesn’t help. The country has registered nine sovereign debt defaults, the most recent in 2020, which has left it largely cut off from foreign capital markets. In 2001, the government froze bank withdrawals after a then world-record debt default, leaving many to watch the value of their savings evaporate as the peso plunged and sparking sometimes violent protests.

In addition, inflation is among the highest in the world. Although it has cooled in recent months, in June it was still 4.6%, over 270% annually.

Small wonder, perhaps, that many Argentines prefer to keep dollars in safes or stuffed under the mattress.

“I don’t trust banks,” said 31-year-old Feli Fernandez, a fintech sector worker who wants to buy a house but sees mortgages as too risky. Although she was then a child, she recalls the 2001 protests.

“I remember that day clearly… My older brother was trying to explain why people were setting fires in the streets,” she said.

Limited access to credit has forced people to get creative.

Sandra Kattan, a 61-year-old teacher, managed to get on the property ladder with a credit card and some dollar savings.

With her husband, they purchased land in Moreno, a Buenos Aires neighborhood, paying around $30,000 upfront in dollar savings, raising more money by selling their car and truck. In 2017, they used a credit card to pay for materials to start building and paid workers with Kattan’s teaching salary.

“Mortgages that existed were too expensive for us, it was inaccessible,” she said. “We were a little afraid of bank loans… We were afraid of inflation.”

Argentina’s government has cited the return of mortgage products as a signal of support for Milei’s pro-market reforms. He wants to deregulate the economy, reduce state interventions and slash public spending to bring down inflation.

“We went from being headed for almost certain hyperinflation to having mortgage loans,” Economy Minister Luis Caputo said in a speech in June.

Although acknowledging that they are starting from a low base, banks are cautiously optimistic.

Manuel Herrera, general manager of Banco Hipotecario, said in June the bank had received over 60,000 queries since launching a mortgage product on April 20.

“We have nine loans in the process of being carried out. That’s a lot,” he said. “Up until now there were no mortgage loans at all.”

Argentines taking to the streets to revel in their Copa América triumph inhabit a very different place now than they did 19 months ago, when their World Cup win sent millions surging into the same Buenos Aires square in a howl of collective celebration.

“Glorious,” Diego Cáceres, 38, recalled of Argentina’s massive open-air party on December 18, 2022.

“This is beautiful, too,” he said of Sunday’s crowds cheering and setting off fireworks around the capital’s landmark obelisk after Argentina beat Colombia 1-0 in extra time to win its third straight major tournament Sunday night.

“But it’s a cherry-on-top, or a reminder. It makes me want to go back in time.”

Poverty stricken

Economic crisis has stalked Argentina for years. But today, annual inflation tops 270%. Almost 60% of the country’s 45 million people live in poverty.

Argentines have become worn out by the high-stakes anxiety of the news: Anti-government protests raging, labor strikes paralyzing cities, President Javier Milei, a self-described “anarcho-capitalist,” unveiling new spending cuts. This week their televisions flashed dire warnings about the peso hitting new lows against the dollar, dragging the value of their savings down with it.

The last time Cáceres celebrated his national team in this downtown square, he worked as a cook in various restaurants and rented an apartment. Today, he said, he’s unemployed and sleeps on the streets.

“Everything is horrible now,” he said after the game finally got underway in Miami after repeated delays due to fan congestion.

“Just when you think things can’t get more expensive, they do.”

Crisis after triumph

Some in this superstitious nation joke that they paid a steep price in Qatar for their first World Cup victory since 1986, pointing to the crises that followed the triumph.

“Has anyone checked the terms and conditions of winning the Copa América?” reads one post on X widely shared among Argentines. “I don’t know if I’m up for a second round of winning at any cost.”

But Argentines say that they needed this tournament, and this trophy, more than they could have imagined. For Argentina, South America’s biggest football championship offered not just glorious achievement but exquisite, if fleeting, escape.

“It’s our best entertainment, that’s what makes it so important,” said Erika Maya, a 47-year-old homeless mother of six, as she peered at the televised match through the glass of a locked restaurant door. “You can forget everything that’s going on, and just enjoy.”

Messi-inspired respite

For every new outrage over the last 24 days, Argentines have found the respite of obsessively watching their beloved national team, led by Lionel Messi, play for an hour and a half, generating moments of agony and excitement that reverberate all over this football-crazed country.

“Football is the fruit of our society, it’s what we’re proud of, it’s what we give to the world,” said 21-year-old soldier Fabrizo Diaz, who watched the match with his girlfriend.

As the game kicked off at Miami’s Hard Rock Stadium, restaurants in Buenos Aires shuttered, streets emptied and the sprawling city fell eerily silent, with most Argentines in thrall to their TVs at home as though under a COVID lockdown. The looming specter of Messi’s retirement has heightened football fever in recent weeks, with the 37-year-old captain’s noncommittal muses in televised interviews inducing, at turns, nationwide hope and despair.

“I believe Messi is going to continue. I don’t know if he’ll make it to the next World Cup, but this is not the end,” said 32-year-old Adrian Vallejos, watching the final with his wife and son. “I mean, God, I hope so.”

Messi’s persistent leg injuries — including a hurt ankle in the second-half of the final that forced him off the field — have drawn more attention than his performances during this Copa América. But Argentines breathed a sigh of relief when, asked by ESPN this week whether this match would be his last in blue-and-white, Messi refused to rule out playing in the 2026 World Cup.

“We’re at a very poignant transition for this team,” said Alejo Levoratti, a sports sociologist at Argentine research institute CONICET. “It’s only at the point of his retirement that Messi arrived at his best moment and found this connection with his team, this communion with Argentina.”

Another Argentine great of the same age, Ángel Di María, had announced Sunday’s match would be his last, fueling a broader sense of nostalgia about the national squad. He had tears in his eyes as he left the pitch to a standing ovation after Argentina’s breakthrough goal. “I dreamt of retiring like this,” he told reporters afterward.

Successful run

After years of disappointments in international tournaments, the Argentine team has, more recently, clinched triumph after triumph — 2021 Copa América, 2022 inaugural Finalissima match, 2022 World Cup — exhilarating its troubled country again and again.

President Milei, who had a short stint as a goalie for the professional football team Chacarita Juniors, congratulated the national team in an all-caps message on X: “WE ARE CHAMPIONS AGAIN…!!!”

In litter-strewn downtown Buenos Aires, the site of so many protests in recent weeks, national pride appeared, briefly, restored. Friends and strangers draped in Argentinean flags and jerseys hugged and jumped up and down, some singing “Muchachos,” the unofficial anthem of the 2022 World Cup, others chanting Messi’s name.

The fall in activity in March follows year-on-year declines of 3.0% in February and 4.1% in January. File
| Photo Credit: AP

Argentina’s economic activity fell 8.4% in March from a year earlier, the country’s official statistics agency said on May 22, its fifth monthly drop in a row and the steepest fall since 2020.

The result was a steeper drop than the 6.9% fall estimated by market analysts in a Reuters poll, underscoring the impact of libertarian President Javier Milei’s cost-cutting policies since taking office in December. Mr. Milei has embarked on a painful austerity drive to bring down rising poverty and annual inflation near 300%.

Nine sectors recorded declines in the year-on-year comparison, led by construction that posted a 29.9% decline and the manufacturing industry which slipped 19.6%, according to the data published by Argentina’s INDEC statistics agency.

Economic activity numbers are seen as a useful early indicator of likely gross domestic product (GDP) results.

The fall in activity in March follows year-on-year declines of 3.0% in February and 4.1% in January.

In the year through March, Argentina’s economic activity fell 5.3%.

President of Argentina, Javier Milei. File

Argentina’s monthly inflation rate eased sharply to a single-digit rate in April for the first time in half a year, data released Tuesday showed, a closely watched indicator that bolsters President Javier Milei’s severe austerity program aimed at fixing the country’s troubled economy.

Prices rose at a rate of 8.8% last month, the Argentine government statistics agency reported, down from a monthly rate of 11% in March and well below a peak of 25% last December, when Mr. Milei became president with a mission to combat Argentina’s dizzying inflation, among the highest in the world.

“Inflation is being pulverized,” Manuel Adorni, the presidential spokesperson, posted on social media platform X after the announcement. “Its death certificate is being signed.”

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Although praised by the International Monetary Fund and cheered by market watchers, Mr. Milei’s cost-cutting and deregulation campaign has, at least in the short term, squeezed families whose money has plummeted in value while the cost of nearly everything has skyrocketed. Annual inflation, the statistics agency reported Tuesday, climbed slightly to 289.4%.

“People are in pain,” said 23-year-old Augustin Perez, a supermarket worker in the suburbs of Buenos Aires who said his rent had soared by 90% since Mr. Milei deregulated the real estate market and his electricity bill had nearly tripled since the government slashed subsidies. “They say things are getting better, but how? I don’t understand.”

Mr. Milei’s social media feed in recent weeks has become a stream of good economic news: Argentine bonds posting some of the best gains among emerging markets, officials celebrating its first quarterly surplus since 2008 and the IMF announcing Monday it would release another $800 million loan—a symbolic vote of confidence in Mr. Milei’s overhaul.

“The important thing is to score goals now,” Mr. Milei said at an event Tuesday honoring former President Carlos Menem, a divisive figure whose success driving hyperinflation down to single digits through free-market policies Mr. Milei repeatedly references. “We are beating inflation.”

Shrinking economy

Even so, some experts warn that falling inflation isn’t necessarily an economic victory—rather the symptom of a painful recession. The IMF expects Argentina’s gross domestic product to shrink by 2.8% this year.

“You’ve had a massive collapse in private spending, which explains why consumption has dropped dramatically and why inflation is also falling,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics who studies emerging markets. “People are worse off than they were before. That leads them to spend less.”

Signs of an economic slowdown are everywhere in Buenos Aires—the lines snaking outside discounted groceries, the empty seats in the city’s typically booming restaurants, the growing strikes and protests.

At an open-air market in the capital’s Liniers neighborhood, Lidia Pacheco makes a beeline for the garbage dump. Several times a week, the 45-year-old mother of four rummages through the pungent pile to salvage the tomatoes with the least mold.

“This place saves me,” Pacheco said. Sky-high prices have forced her to stick to worn-out clothes and shoes and change her diet to the point of giving up yerba mate, Argentina’s ubiquitous national drink. “Whatever I earn from selling clothes goes to eating,” she said.

Mr. Milei, a self-proclaimed “anarcho-capitalist” and former TV personality, warned his policies would hurt at first.

“It’s not his fault, it’s the Peronists who ruined the country, and Mr. Milei is trying to do his best,” said Rainer Silva, a Venezuelan taxi driver who fled his own country’s economic collapse for Argentina five years ago.