The rapid urbanization of southern hemisphere cities is placing them on the frontline of the 21st century development agenda. Intense transformation processes pose both challenges and opportunities to think and act on the future of cities. In Latin America, these processes have increased the scale of the urban environment, with intermediate cities as the main protagonists. In Chile, they exhibit accelerated socio-spatial changes, thus revealing urban expansion and physico-environmental degradation in their downtowns. In the case of Valdivia, an economic, political and morphological approach is used to explore factors and determinants that have influenced its expansion since the earthquake of 1960. The results reveal that current urban policies and planning instruments have encouraged and transferred to the private sector the responsibility of shaping urban growth through new expansive and low density developments towards the peripheries. This has generated profound changes in the territory and exacerbated socio-spatial segregation in cities.