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The return of the Algerian state as a major stakeholder in the housing sector with the aim of easing social tensions has led to the development of new peripheral residential areas, a result of a series of actions concerning housing. Tlemcen, a city whose urban evolution is studied here in detail, has undergone new urban development characterized by a considerable expansion in residential zones mainly due to the increase in construction programs of predominantly multi-family housing. In the midst of a real estate crisis, these new units have been built on state land thereby encouraging social diversity. A new socio-spatial differentiation seems to be emerging in this Algerian town, combining luxury apartments with low-cost housing, although it is still premature to have a clear view of its future evolution. New measures to reduce social inequalities have been implemented by the government. They have accompanied the changes in Algerian society and have had positive effects in improving housing conditions in recent years. However, the role of local authorities and private developers in construction has remained limited. These stakeholders have limited their role to a logic of wealth redistribution, acquiring real estate revenue through speculative practices. Finally, the implementation of institutional housing programs has not prevented the development of informal settlements, built by those people excluded from official housing allocation channels.