New Zealand's immigration boom wasn't as big as reported at the time, a major revision by Statistics NZ has found.
That means we'll need to build fewer houses to meet the current shortage, says Westpac senior economist Satish Ranchhod.
The new, more accurate data shows there's fewer people in New Zealand than we thought and that has major implications for the economic outlook, he says.
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
Far from being an arcane revision of methodology, the new migration figures change the outlook for GDP growth, employment and housing, Ranchhod says.
Stats NZ has revised the figures based on new research about how many of our new long-term arrivals actually stay 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 turns out more migrants decide not to stick around than we thought.
That's particularly true for those in the 20-29 age bracket, which includes a large proportion of international students.
While tracking the actual movements of new arrivals is more complex than intentions, Stats NZ now has a system which gives much more accurate data.
The change is related to technology which means we no longer have to fill out the arrival and departure cards when we travel.
The lower number has a number of important implications for the economy, says Ranchhod.
"It reinforces our expectations for a cooling in GDP growth and the housing market over the next few years," he says.
Population figures are due later this month which will be lower than previous estimates.
Ranchhod estimates the rate of population growth hit two per cent in 2016 and has slowed to 1.5 per cent.
That's still pretty high by international standards.
In both the UK and US - where immigration has been a political football sparking populist political movements - there has been population growth of between 0.6 and 0.8 per cent.
Regardless, it will change the equations for economists and the outlook for business and the Government.
"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," Ranchhod says.
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," he says.
"It now looks as though residential consent issuance is already at the level required to keep up with population growth."
The trends will be particularly important for Auckland, which has experienced an especially large population cycle. However, their impact will be felt more widely, he says.
"Many other regions are currently seeing high levels of home building, and the durability of those cycles looks increasingly doubtful, especially given the policy-induced slowdown in the housing market already in train."
On Twitter this afternoon former finance minister Steven Joyce noted that the changes arose out of concerns he had about StatsNZ potentially mis-counting how many international students were actually permanent migrants.
The new figures actually improved GDP per capita and productivity calculations and decrease 'perceived' housing demand, he said.
While the revisions might have been helpful for National prior to the last election, Joyce said he doubted they would have changed the results.
He said he resisted pushing to have them revised any faster as: "we were very conscious that any attempt to hurry StatsNZ in their work would have been seen as political interference and fed any "cooking the stats" narrative."