I tend to agree with Philofacts. Prices are still massively overinflated. One of the contributing issues is the withdrawal of the requirement of HIPs for sellers. Now that cost of around £500 has gone, the market has become even more flooded with chancers who aren't necessarily committed to selling their home. Consequently vendors are putting their homes on the market for silly prices.
In general though, sellers won't or cant sell for normal prices because they're either in negative equity or refuse to sell at a reasonable price during what they consider to be 'the bottom of the market'.
All very frustrating for first time buyers.