The original purpose of public housing in Israel was to supply permanent shelter for new immigrants. In the meantime, its role has changed and its main functions are now to provide affordable housing to low income households and temporary rentals to specific target groups, in particularly new immigrants. Since the first housing projects were constructed, efforts have been made to sell the dwellings to the occupants. Thus, by now almost two thirds of the stock ever owned by the state have been purchased by tenants. Nevertheless, the privatization of public housing in Israel has not been a case of policy reversal, but part of a fairly consistent policy concerned with two goals:the promotion of ownership and the provision of affordable shelter to specific target groups such as new immigrants. In a survey of public housing residents, renters and recent buyers were found to be quite similar in their attitudes regarding home ownership. They differ, however, with regard to their socio-economic status, demographic characteristics, and the proportion of owners in the building. These differences explain much of the observed social residualization of the remaining public rental stock.