The trend on the Continent was the opposite. Home prices in most European countries barely moved, mainly because markets were more regulated, there was more housing stock and renting was more popular.

Liz Bingham, head of restructuring at Ernst & Young in London, blames the obsession with homeownership on Britain’s “island mentality”: land is seen as a finite good and a valuable asset.

“The housing boom automatically made people feel richer than they actually were and people went on to use the equity locked up in their property almost as a bank account they can dip into every time they want to buy a new car,” Ms. Bingham said.

As the perception of wealth grew, the social stigma around debt disappeared. Borrowing became such an accepted part of life that today one in five teenagers does not consider being in debt to be a bad thing, a survey by Nationwide Building Society showed.

Debt levels increased further as it became easier to get loans, and retailers, like computer chain PC World, offered both goods and the loans to buy them. Consumers happily accepted, thinking that as long as they were deemed creditworthy, they were not in danger of defaulting.

Andy Davie is a case in point. Even after he had racked up £70,000 in personal debt trying to keep his fruit and vegetable business afloat, credit card issuers kept increasing his credit limits.

Image James Falla of Thomas Charles says consumers had a false sense of security. Credit... Luke Wolagiewicz for The New York Times

“You tend to use credit to pay for credit and as far as the banks are concerned you are fine,” said Mr. Davie, 41.