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.