Real estate executives and the Property Council have warned against putting more limits on foreign investors after Treasurer Scott Morrison flagged possible proof of residency checks to halt illegal sales.

Mr Morrison make the comments a day after announcing more forced sales of residential properties illegally bought by foreign investors.

Investors without Australian residency generally need to apply for approval before buying residential property. Further, under Coalition changes announced in December, foreign buyers and agents or lawyers involved in illegal purchases can face penalties for breaking the law.

Scott Morrison has said the government is looking at further changes to prevent illegal sales to foreign buyers. Brook Mitchell

Mr Morrison raised the possibility of working with the states to change conveyancing laws so investors had to declare they were legally able to purchase the property in the contract.

"The purchases take place under state conveyancing laws, not federal. So it means that the states and the federal government working together and there is nothing wrong with us doing that. I think it is a really good suggestion. It has been made to me already and so we are taking a close look at how we can achieve that," he said.