The Housing Authority said on Wednesday that it will be cutting costs over an estimated 10 percent drop in its overall operating surplus for the 2026/27 fiscal year.

The projected surplus for 2026/27 is nearly HK$15.9 billion, down from HK$17.7 billion the year before.

The authority said that a drop in the average selling price of subsidised housing units is a contributing factor.

Building expenses remain the authority's biggest cost. It said expenses are expected to rise due to an increase in the number of new public housing projects.

The authority's year-end cash and investment balance is expected to drop significantly, falling over 40 percent from HK$63.5 billion in 2026/27 to HK$35.3 billion by 2029/30.

Billy Mak, chairman of the authority's finance committee, said that the authority will cut recurrent expenditure by 2 percent annually for the coming two years.

He stressed the need to control construction costs.

"Based on our current estimates, we have enough money for the time being. However, we will constantly be looking at what expenses we can reduce," he said.

The authority will hold an open meeting on January 19 to examine the budgets and financial forecasts before submitting them to the chief executive for approval.