That households with similar housing needs, income and age chose to live in similar areas because they all had common needs/requirements. The Marxist view proposed that families, specifically those that were of low income, had little or no choice as to where they were able to live. The Marxist view argued that the poorer families were restricted to areas deemed "appropriate" to their socioeconomic position and that workers would live near factories, ethnic groups in ghettos and higher income earners in more comfortable residential suburbs in separate parts of the city to that of the lower income earners. (Forster 1999, p96).
The other main viewpoint was that of the managerialist, that argued that the segregation was caused by people they referred to as urban gatekeepers such as officials in public housing authorities, building societies, banks and town planning departments.(Forster, 1999 p96) It can be seen today that all of these views were valid to an extent, though it was neither one nor the other, but a combination of all three.
To an extent residential differentiation is caused by individual choice, in that younger families do chose to live in outer suburbs for the simple fact that there is more space to raise a family. People choose to live in the "best" area that their income allows for and people from ethnic backgrounds do tend to live in areas where there is a high proportion of people from the same background, simply for language and cultural reasons.(Forster, 1999 p99).
In terms of the managerialist view, the so called urban gatekeepers had a large role in limiting the choices that people had. Building societies and banks controlled who was allocated and ultimately the home that home buyers were able to buy. Most only granted loans for new housing, forcing first home buyers on the urban fringes where there was unused land available. Until recently banks would only take into account the income of the male worker, which even further restricted the housing that could be afforded.