(Bloomberg) -- Two major Chinese cities saw weak sales in their latest round of land auctions, signaling cash-strapped developers remain reluctant to bid even after local governments relaxed rules. 

Plots offered by the municipal government in Shenzhen, the nation’s least affordable residential market, fetched just 5% more than the total asking price in auctions that ended Thursday, according to China Real Estate Information Corp. That’s down from 12% in the previous round in September and 31% in May. 

All parcels were sold in the city, after purchasing restrictions were loosened slightly and the number of parcels supplied was halved from the prior round.

Sentiment was worse in Nanjing, the capital of China’s eastern Jiangsu province. About 26% of land parcels offered went unsold, up from 23% in the previous batch and 2% before then, CRIC said. Nanjing lowered the threshold for developers by allowing them to bid jointly. It also offered more parcels in prime areas to woo bidders.

The results may be a harbinger for other Chinese cities, straining the finances of municipalities which rely on land sales for much of their revenue. Developers are hoarding cash as fund-raising becomes tougher during a government deleveraging campaign. A slump in home sales and prices is adding to their woes, further dissuading builders from buying land.

“Liquidity at many developers is still super tight, so their interest hasn’t warmed up much yet,” said Xie Yangchun, an analyst at CRIC. “The land market in key cities is likely to remain lackluster in the third round of centralized bidding.” 

In February, more than a dozen large Chinese cities limited the number of land auctions this year to three, instead of holding multiple smaller-scale events throughout the year, in a bid to prevent developers from inflating land prices. But as the property industry’s troubles escalated in the third quarter, the rule exacerbated a land market slump. 

The vast majority of land buyers in Shenzhen were state-owned developers, signaling private real estate companies are still struggling. Shenzhen Metro Group, a railway line builder foraying into property, snapped up five plots out of 11, official figures showed. China Vanke Co., which Shenzhen Metro holds the biggest stake in, didn’t purchase any. 

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