Chile has achieved a dramatic reduction in material poverty since 1990, in part through a massive programme of state‐subsidized housing that has almost eliminated slums, especially in Santiago. Sceptics assert that the improvement in material conditions has been accompanied by a decline in the cohesion and quality of ‘community’ in poor neighbourhoods. This article challenges this assertion, using data from a 1985 survey conducted in poblaciones (i.e. public housing dating from the 1960s) and a 2001 survey conducted in newly built public housing or villas. In contrast to popular wisdom, these surveys suggest that villas score higher than poblaciones in most indicators of social capital analyzed. Finally, this article contends that in order to comprehend the relation between poverty, space and community, more networked and decentred analytical approaches are needed.