Mind you, if you want to buy at least you can now. Whilst the market's going up you can often offer at the asking price only for the seller to say "thanks but it's another 1/2 mil now". You then think about it for a few days and go with the extra 1/2 mil but the seller now says "well, if you'll pay that much then someone will pay an extra mil" etc...You can end up wasting a lot of time and increasing the old BP significantly and still have no flat to show for it!
ATY, we're all dying to know - did he go for the 1 mil reduction or keep the deposit? Personally I'd just say "bog off" and rent as I hear rents are quite good at the mo.