Relationship between Rising Housing Prices and Reduction in Urban Agglomeration

Abstract

The city is an intertwined network constructed in a limited space by such economic markets as housing, labor, land, and transportation. The emergence of the city is a sign of civilization representing a higher form of human society. The development of cities plays an important role in regional and national economies. This paper investigates factors influencing urban agglomeration from the perspective of economic and population agglomeration. The authors selected 285 prefecture-level cities in China as a research sample and used the System Generalized Method of Moments (GMM) for regression analysis. The results reveal an inverted U-shaped relationship between housing prices and urban economic agglomeration in mid-western and eastern cities. However, an inverted U-shaped relationship was observed between housing prices and population agglomeration in the eastern cities and a U-shaped relationship in the mid-western cities of China. The influence of housing prices on population agglomeration can be divided into two periods. When housing prices were low, the population flowed from the mid-western to the eastern cities. When housing prices were high, people left the eastern cities and returned to the mid-western cities. However, under the influence of regulatory policies by the government, labor flowed back from the mid-western cities to the eastern cities.