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• Monetary resettlement compensation influences the house purchase intention greatly. • Compensation flows back from rural to urban areas through house purchase behavior. • The existing policy has hindered two-way flow between urban- rural resources. • A new strategy to achieve two-way flow between urban-rural resources was proposed. The reasonable two-way flow of resources between urban and rural areas underlies the processes of urban-rural transformation and rural revitalization in China. The monetary resettlement compensation policy has been formulated to promote this two-way flow through market-oriented measures. This study extends the Theory of Planned Behavior by enhancing the variable of monetary resettlement compensation factor to analyze the behavioral tendencies of house purchase intention of relocated households in Zhejiang Province, China. An empirical analysis through PLS-SEM was conducted on the results obtained from 271 survey responses, and eight hypotheses were verified using SmartPLS 3. The results demonstrate that the monetary resettlement compensation policy may facilitate relocated households' purchase of houses in urban areas, which is indicative of compensation flowing back from the rural to urban areas through the house purchase behavior. Furthermore, a study on the possible gap between relocated households' purchase intention and their actual purchase behavior shows that the intention is aligned with actual action. The monetary resettlement compensation policy has thus failed and even hindered the achievement of a reasonable two-way flow of resources between urban and rural areas. [ABSTRACT FROM AUTHOR]