Alex - you fail to see the dilemma that is inherent in the situation you describe, which is that newly arising demand for social housing is NOT being satisfied by the existing stock, which is predominantly occupied with tenants having security of tenure.
The relevant factor that defines how many on the waiting list can be satisfied is not the size of the housing stock, it is the reletting rate of that stock.
The housing that is occupied by long-term tenants living in their family homes is not available for re-letting. It is static, blocked.
Selling on this part of the housing stock to the long-term tenants releases the tied-up equity and allows it to be put towards provision of additional housing to satisfy the newly arising demand.
That is positive for those who are on the waiting list, not negative.