New Zealand has slipped from third to tenth position in the global house price index for the second quarter of 2017.

According to the index report from international real estate firm Knight Frank, the downward market direction of New Zealand was brought about by the moderation in annual price growth to 10.4%.

The report showed 49 of the 55 tracked housing markets recorded flat of positive for the year ended in June.

House prices in key countries around the world increased by an average of 5.6%, led by the 23.2% increase on average prices in Iceland – the nation leading global growth for the third quarter in a row.

This was followed by Hong Kong (21.1%), Malta (14.6%), Canada (14.2%), Turkey and Czech Republic (both at 12.7%).

The index showed New Zealand and Canada housing markets, which have moved in tandem for the last few years, moving in opposite directions.

Economic fundamentals remain firm, unemployment was down and wages rose, yet the number of homes for sale declined for the past four years – indicating tighter housing markets, a Property Wire report said.