This paper examines the issue of quality in housing design through reference to the manner in which the living space is utilised. Treating spatial structures as territories of interaction, a new set of parameters—defined as hierarchies of area and order—are used to assess the impact of functionalist housing design upon the usage of living space and hence quality. A series of case studies undertaken in Lisbon are employed to highlight the observation that the fixed model of human behaviour implied in functionalist design fails to support a flexible usage of the dwelling space. The paper concludes that there is a consequent need to develop spatially oriented models of housing design.