A car drives past a residential block for sale on the outskirts of Mackay city, Queensland state, Australia on June 14, 2013. [Photo/IC]

A Chinese buyer has been ordered to sell his A$5 million ($3.7 million) Melbourne mansion after he was found to be holding it illegally.

Australian Treasurer Scott Morrison said on Wednesday that seven properties illegally purchased by foreigners have been ordered to be sold off, including a A$5.2 million house owned by a Chinese buyer. The other six property buyers are from the Chinese mainland, Hong Kong, and Germany.

The five-bedroom house with a pool, manicured gardens, and formal dining and sitting areas was purchased by a Chinese businessman at an auction on May 31 last year, and it is now back on the market.

In the face of skyrocketing home prices in Sydney and Melbourne, the Australian government announced new measures in March, cracking down on illegal foreign homebuyers.

However, official statistics showed that some purchase limit policies have not been strictly carried out over the past few years.

Morrison said that since the foreign ownership crackdown began in March, the government has investigated 1,044 property sales and has another 532 sales under investigation.

Morrison added that including the seven latest mandatory re-sales, a total of 19 properties illegally purchased by foreigners have been ordered to be sold.

The forced sales are the first since Morrison became Treasurer in September, and suggest the new conservative government will stick to the previous government's strategy of cracking down on foreign property sales to improve affordability.

According to Australian laws, except under special conditions, foreign nationals are not permitted to buy a secondhand house in the country, but they can buy new ones.

In addition, if a foreign investor has a visa to stay in Australia for 12 months, he or she can buy a property in the country, but would have to sell it within three months after leaving Australia.

However, circumventing these laws, some foreigners illegally purchase properties with the help of real estate agents, lawyers and friends.