I'm not sure it's as big an issue as your relative makes out. When I was an estate agent (hackney) we sold lots of properties that were directly next to council/HA properties. Of course, this put some people off but was much less of an issue if the property was a flat over say a house. The buyers looking at the flats would generally be younger, first-time buyers etc. and this was less of a concern.
If the property is decent and in a good spot I wouldn't rule it out and I don't think it would make it significantly more difficult to sell in the future.