This paper contributes to the debate on the role of public policy in gentrification through a case study of three phases of proactive promotion of residential intensification, especially to increase homeownership in central neighbourhoods in the City of Montréal (Québec, Canada). This case is used to explore the following questions: Where municipalities seek to enact ‘urban revitalisation’ by using housing policy tools to manipulate the size and composition of the resident population, what are the influences of local/regional fiscal and jurisdictional contexts? How are these articulated with the city's economic development trajectory? How do neoliberal policy turns emanating from scales beyond municipal jurisdiction influence the balance worked out in the domain of local housing policy between, on the one hand, local states' preoccupation with ‘fiscal pragmatism’ and local investment climates, and on the other hand, the demands they face to use their powers to reduce social inequalities within their territory? In the urban geographical literature, municipal involvement in new‐build gentrification is seen as an expression of a broader turn to urban neoliberalism and the concomitant entrepreneurial turn by the local state. The paper shows that exploring the influence of discourses around the ‘population question’ can add depth, nuance and complexity to such analyses. Copyright © 2009 John Wiley & Sons, Ltd.