Since the early 1990s public housing in Australia has become increasingly residualised. The high demand and limited availability means that in order to be eligible potential tenants usually have to be in ‘greatest need’. This article has three main sections. It first considers the processes which have led to the residualisation of public housing. Second, through the use of in-depth interviews the way older public housing tenants in inner-city neighbourhoods in Sydney portray the shifts in the social composition of tenants is explored. The third objective is to investigate the anti-social behaviour older tenants experience and its impact on their everyday lives and how they cope. Loïc Wacquant’s concept of advanced marginality is used to examine the residualisation of public housing. The impact of residualisation is assessed by exploring how it impacts on older residents’ concept of home and what is considered an age-friendly environment.