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Housing expenditure tends to be sticky and costly to adjust, and makes up alarge proportion of household expenditure. Additionally, the loss of housingcan have catastrophic consequences. These specific features of housingexpenditure imply that housing stress could cause negative mental healthimpacts. This research investigates the effects of housing stress on mentalhealth, contributing to the literature by nesting housing stress within ameasure of financial hardship, thus improving robustness to omitted variablesand creating a natural comparison group for matching. Fixed effects (FE)regressions and a difference-in-differences (DID) methodology are estimatedutilising data from the Household Income and Labour Dynamics in Australia(HILDA) Survey. The results show that renters who are in housing stress have asignificant decline in self-reported mental health, with those in priorfinancial hardship being more severely affected. In contrast, there is littleto no evidence of housing stress impacting on owners with a mortgage. Theresults also suggest that the mental health impact of housing stress is moreimportant than some, but not all, aspects of financial hardship.

Incorporating Financial Hardship in Measuring the Mental Health Impact of Housing Stress