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Westpac senior economist Satish Ranchhod said that meant New Zealand would need to build fewer houses to meet the current shortage.
The new, more accurate data showed there were fewer people in New Zealand than thought and that had major implications for the economic outlook, he said.
Net migration peaked at 64,000 in mid-2016, not 72,500 in 2017, according to revised figures. It is now tracking at 43,000 - about 20,000 fewer migrants a year than previously thought
The new migration figures changed the outlook for GDP growth, employment and housing, Mr Ranchhod said.
Stats NZ had revised the figures based on new research about how many of new long-term arrivals actually stayed in the country.
The previous data was based on the intended length of stay, as recorded on immigration forms by long-term migrants when they arrived at the border.
But it turned out more migrants decided not to stick around than thought, he said.
That was particularly true for those in the 20-29 age bracket, which included a large proportion of international students.
While tracking the actual movements of new arrivals was more complex than intentions, Stats NZ now had a system which delivered much more accurate data, Mr Ranchhod said.
The change was related to technology which meant no longer having to fill out the arrival and departure cards when travelling.
The lower number had important implications for the economy.
"It reinforces our expectations for a cooling in GDP growth and the housing market over the next few years,'' he said.
Population figures are due later this month and were expected to be lower than previous estimates.
Mr Ranchhod estimated the rate of population growth hit 2% in 2016 and has slowed to 1.5%.
That was still pretty high by international standards, he said.
Both the United Kingdom and the United States have recorded population growth of between 0.6 and 0.8%.
Regardless, it would change the equations for economists and the outlook for business and the Government, he said.
"That will be important for many businesses, meaning that an `easy' source of demand growth that they've enjoyed in recent years is dissipating even faster than expected.''
It should also mean fewer houses are required to be built to deal with the current shortage.
"For some time, we have been highlighting that the rate of dwelling construction was catching up with population growth.
"It now looks as though residential consent issuance is already at the level required to keep up with population growth.''