Background The association between good mental health and housing circumstances is well established. Tenure, household crowding and housing affordability have all been linked to mental health and psychological distress. These cross-sectional relationships are collinear and confounded, and so provide little information on the possible effects of changing housing circumstance on mental health or psychological distress. To do this longitudinal data are needed.

Methods In this paper we use the longitudinal data from the 11 500 NZ households in the Survey of Families, Income and Employment (SoFIE), conducted in New Zealand from 2002 to 2010. We examine the cross-sectional associations of housing factors on psychological distress and use fixed-effects modelling of longitudinal data to examine any effects of changes in selected housing factors on changes in psychological distress.

Results We show large significant cross-sectional associations between all the housing circumstances and psychological distress. These associations were not present in the fixed-effects models. Only changes in individual deprivation had a significant effect on changes in psychological distress. While a significant effect was found for moves to and from houses with a two-bedroom deficit, the small number of moves of this type means these results are not robust.

Conclusions These results show that the effect of house ownership and housing affordability on psychological distress is likely to be confounded in the cross-sectional models. Therefore, marginal changes to these housing factors are unlikely to yield large reductions in psychological distress. Our results suggest that reductions in psychological distress are more likely to be seen through interventions that target individual socioeconomic deprivation and severe household crowding.