"The more important thing is the trend over time in these rankings, and the tendency there is for all New Zealand universities to increase their scores [but] to decline in the rankings, which means we're doing better, but other people are doing better than us," he said.
Funding and resources in universities had to be addressed, Professor Morrow said.
"A number of measures in these rankings are directly related to resources. The worry for us and the worry for New Zealand is that the resource base for universities has been declining over the last 15 years or so and declining in particular relative to resources available to universities in other systems."
To be competitive and attract overseas students, New Zealand universities needed to be well-resourced, he said.
The University of Otago remained in the ranking group of 226-250.
Victoria University in Wellington dropped a ranking band, moving from the 251-275 group in 2012/2013 to 276-300.
Canterbury and Waikato universities stayed put, between 301 and 350.
The list, which is issued each year, uses 13 performance indicators to test a university's strength against its core missions.
Several Australian institutions also slipped places.
Australia's top performer, Melbourne University, was knocked out of the top 30, dropping six places to number 34.
Adelaide University fell from the top 200, leaving only seven Australian institutions in the group. Of these, four - including Melbourne University - dropped places.
Minister for Tertiary Education, Skills and Employment Steven Joyce said the new rankings reflected the "increased competitiveness of the international university market".
"The Government has increased its investment in universities by 16.5 per cent over the last four years, despite tough financial times. The annual income of New Zealand universities is nearly $500 million a year higher in 2012 than it was in 2008."
