RENEE MONTAGNE, HOST:
This is MORNING EDITION from NPR News. I'm Renee Montagne.
STEVE INSKEEP, HOST:
And I'm Steve Inskeep. Most Americans who own a house know something about housing bubbles. This country is still recovering from the last one.
MONTAGNE: In Afghanistan, a housing bubble created by the influx of international organizations and their thousands of workers over the past 12 years, is bursting, and it's taking a big bite out of the local economy. NPR's Sean Carberry can hear the last gasp of that bubble on his own street.
(SOUNDBITE OF BANGING)
SEAN CARBERRY, BYLINE: That is why I don't need to set an alarm in the morning. Every morning, seven days a week, the cacophony of construction workers banging away on two projects next to my house. It raises the question, why is there construction going on at a time of tremendous economic, political, and security uncertainty in this country?
(SOUNDBITE OF CAR HORN)
CARBERRY: Driving around Kabul these days, you see a paradox. For rent signs are increasing in number, yet you can't go more than a few blocks without seeing the green nylon mesh that usually surrounds a building under construction.
SAYED NEZAMUDDIN WAHDAT: (foreign language spoken)
CARBERRY: Sayed Nezamuddin Wahdat is the head of Kabul's 10th District, where he says there are only eight official construction projects - though I've counted more than that. He says these days, for the most part, only rich and powerful people are building, and sometimes doing it illegally. But, in the last six months, the housing market has completely collapsed, says Wahdat.
WAHDAT: I think 60 percent is down.
CARBERRY: Rent prices are tumbling, vacancies are soaring, and sales have flatlined. That means a huge drop in tax revenue for the city. Wahdat says applications for new construction projects have slowed to a trickle, so there will be less and less hammering as the current ones finish.
KARIM BAREKZAI: (foreign language spoken)
CARBERRY: Real estate agent Karim Barekzai says his business is down by at least 50 percent. His explanation for the recent crash? President Karzai's refusal to sign a security agreement with the U.S. that would allow foreign troops to remain here after the NATO mission ends this year.
BAREKZAI: (through translator) I think both the locals and foreigners are waiting for the bilateral security agreement to be signed, so that's why they are not investing for the time being.
CARBERRY: The Safa Akbari construction company is finishing work on this five-story residential building in an upscale Kabul neighborhood. Parwiz Hasan is the company's vice president.
PARWIZ HASAN: Last year was very good business.
CARBERRY: Which is why his company forged ahead with new projects. This building cost them about $700,000 to construct.
HASAN: I build this house, nobody buy this house.
CARBERRY: Hasan says his projects are for Afghans, and the few who are in the market are offering prices that don't even cover his costs. Until he sells this building, he has no capital for future projects.
HASAN: That business people that invest in Kabul, now they are all invest in Dubai, in Turkey.
CARBERRY: Landlords, hardware stores, and materials suppliers are feeling the pinch. So are people like 27-year-old carpenter Ajmal Karimi, who's working on Safa Akbari's building.
AJMAL KARIMI: (through translator) I once had contracts to work on three or four buildings a year. Now, half a building is a big achievement. Previously, I made around $800 a month. Now, I make about $400.
CARBERRY: Karimi agrees that business is down because of the uncertainty over the security agreement. But, even if it is signed, foreigners and their money will continue to leave the country. And, that's letting more air out of Kabul's housing bubble. Sean Carberry, NPR News, Kabul. Transcript provided by NPR, Copyright NPR.