In capitalist countries it is extremely simple: Those who can afford it gets the nice houses, and those who can't get the social housing (with all the in-betweens that came around).
However in communist countries (I think specially of pre-1990 central and eastern Europe), since the state was owning all the buildings anyway, what determined who were the privileged ones to live in more beautiful individual houses with garden?
In the USSR, the main allocation of housing was done through "the apartment queue" managed by local municipalities - families needing housing and fitting certain criteria (i.e., your current housing had less than x square meters per person) would apply for apartments or parts of apartments (larger pre-soviet apartments were often allocated to be shared between multiple families). The allocation was generally on first-come first-serve basis, but also included a prioritization based on social policies - e.g. families with lots of children, ww2 veterans, etc groups had a priority queue. This was the core part of discrimination who gets better housing - the further/longer you stay at the queue (the waiting generally was for many years), the worse/less housing you have. Also, special individuals - national artists, politicians - got a separate 'dwelling allocation' by the government.
A major addition to this was housing managed and allocated by the employers, not the municipality. For example, large factories and collective farms would build their own apartment complexes and allocate them to their employees based on job performance (and internal politics), or allocate them to arriving non-local employees to increase production at a specific location that didn't have enough workers, in order to make this destination more attractive. That was a big issue - a lot of internal migration happened because of industrial demand, and the manufacturing organizations coordinated the settlement of workers where they were needed.
At least in the 1980ies, there was also an informal market of 'apartment barter'. I.e., families each wanting different locations could swap their apartments. This required municipal approval - i.e., after the swap the space/person criteria would have to be suitable, and a person couldn't hold two apartments as a result of that, but it could be gamed (e.g. by formally listing different family members) and also "side considerations" could be included in the deal, and thus this was a practical way to market-allocate housing.
It is usually the achievements in their work that would normally bring them privilegies compared to their colleagues, and the strength of the enterprise they were working at.
One collective would have better benefits than the other collective if their enterprise is more prestigeous. More prestigeous enterprise was usually greater by volume and more impotant to the country. For instance, in the USSR railroads were known to be quite rich enterprises and to provide good sea resorts to their employees. Often military industrial enterprises, associated with secrecy were more prestigeous than the civil industries. Of course getting a prestigeous job would be easier if you are a valuable specialist and have some achevements.
One colleague would have benefits compared to the other colleagues if he has merits and achevements compared to others in their enterprise - overcompletes plans, produces high quality output, makes inventions and proposes optimizations, awarded state awards, prizes and honorary titles, like "merited (job name) of the USSR/contituent republic", hero of socialist labour etc.
Long term job experience would also contribute, some enterprises had strict rules that if you worked for some time you would be given a flat. Some enterprises would attract young specialists from other cities by promising them a flat or a room in a shared flat. Especially jobs located in a cold climate areas, in the far North and East could be expected to provide serious benefits (mostly in terms of money and summer vacations).
The most bonuses were granted to the national celebrities, like writers, artists, actors, sportsmen, scientists, generals, film directors, cosmonauts etc, following their significant achievements (olympic medals, scientific discovery, state prises, orders etc). Such people would be granted summer houses in pine forests, flats in the center of Moscow in ornate buildings etc. They would also likely to be nominated for legislatures ("councils") of various levels.
Note that if your housing capacity was insufficient for your family according to certain standards, the state was obliged to provide you with adequate housing regardless of your job achievements. But this could be in a non-prestigeous, remote place and you could wait for it for a long time moving in a queue.
Of course there were always corrupt schemes where people provided benefits to their relatives, friends, for bribes or for mutual exchange.
Regarding the details, I would say that living in a private individual house was not usually considered more prestigeous than in a state-owned flat in a city. Most of the "middle class" usually had a flat in a city and a summer house beyond city limits. In year-round houses in village and small town areas usually lived peasants and the eldery.
