This paper focuses on resolving a defect of population-based urban sprawl analysis from a land-use planning perspective. This defect is indicated for a few metropolitan areas, which have experienced a controversial phenomenon of population decentralisation but with potential household centralising force. With the emphasis on household movement, this paper first aims to clarify the role of populations, households and employment that characterises urban sprawl and to check if unmet housing demand in city centres can be identified. Second, we evaluate the influence of household distribution factors, such as unmet housing and land-use related factors, on spatial-structure-based compactness/sprawl, taking time lag into consideration. A new classification of urban forms is developed to identify potential residential centripetal market forces. Additionally, the housing demand generation-distribution + push-accessibility-pull (GD+PAP) analysis framework is applied. The results of an empirical study on the Taipei metropolitan area between 1980–1990 and 1990–2000 suggest that the most significant policy towards compactness is high density. We recommend a prioritisation in city centres, particularly when housing demand is underserved.