Lyric discussion by martynmc 

Cover art for God Is in the House lyrics by Nick Cave and the Bad Seeds

It quite clearly is a criticism of small town christianity where people live with nothing but an overriding faith in God that causes them to have predjudices which they feel they can justify. That much is obvious from the lyrics, and Nick Cave may very well be a Christian but he certainly doesn't approve of what Christianity can become in some instances and that's been a theme throughout most of his album's, just have a read of the lyrics to Get Ready For Love if you really want it spelled out.