So you pull out and relist for £25k above your asking price, viewers still hate the way you've decorated (or whatever), nobody offers. Your seller relists the house you want to buy because you've made yourself unproceedable.
Meanwhile your neighbours' would-be buyers get their mortgage valuation done, the surveyor looks for comparables, sees that your house went under offer with an asking price £25k lower and that the sale fell through. Surveyor assumes that given the time lag and that you're still trying to sell, surveys and searches revealed your house wasn't worth that lower price and your buyer pulled out, and devalues neighbour's house accordingly.
Bank refuses to lend. Neighbour's buyer can't/won't stump up the difference and pulls out.
Neighbour goes back on the market at a lower price, undercutting you.
Neighbour gets a lower-than-asking price offer from buyer who sees two neighbouring properties with fallen-through sales, one of which having been put on the market over a year ago so clearly the one to avoid.
You are then left with a property that hasn't shifted, no buyer and no option but to reduce - possibly to lower than your current offer.
You might get lucky or you might be in a much worse position than you are currently. However, you might also find that your EA refuses to relist - and if you're looking in the same area, will favour other buyers... Or that house prices have indeed gone up so much that you can no longer afford to offer on the house you're buying, when they remarket because you can't proceed, or indeed on any others.
Up to you whether you take that risk...