There are so dreamers out there, when I bought my R32 I offered a guy 48K for his, he had it advertised for $50k. He wouldn't budge, 4 months later it was still up there, but he had dropped it to $46. I'd see if you can find similar age/kms Stis and if cheaper use those as leverage to lower the price. But saying that some people think it's their given right to get a discount, he doesn't have to drop the price. So if it's cheapish/fair compared to other cars then pay the $39'950.
EDIT

Having just had a look on carsales and redbook, 39K seems pretty good. There are 07s, with similar kms that cheaper, but they are interstate. So if those 20kms are genuine and the car hasn't been drilled I'd go for it. The fact that someone saw him accelerate hard from the lights once, or that he's changed the price multiple times is pretty much irrelevant. But if it's spent most of it's life on a track, then that could be a concern.