Population wise, urban areas are densely populated. On the contrary, rural areas are sparsely populated.
The meaning of the suffix ‘something-wise’ is as follows: “speaking of something” or “referring to something”.
In your context it is more like: Speaking of population, urban areas are densely populated. On the contrarym, rural areas are sparsely populated.
I hope that helps!
Population-wise means in terms of population, in relation/reference to population, on the basis of population etc.
I would not use ‘population wise’ and ‘densely populated’ in the same sentence as it would resemble a tautology.