The combination of the departure of foreign migrants and Government policies means net annual migration is expected to drop from about 70,000 now to 10,000 in 2021.
Net migration for the year to October remained high by historical standards but at 70,000 was lower than the peak of 72,400 in the July year, Statistics New Zealand senior manger Peter Dolan said.
The fall in annual net migration from the July-year peak was mainly caused by an increase in non-New Zealand citizen migrant departures.
There were a record 27,400 such departures in the October 2017 year, up 1.6% from the September year and up 22% from October 2016, he said.
Westpac senior economist Satish Ranchhod said the migration cycle had turned.
Looking at the breakdown of the monthly flows, a continued falling trend in net migration was on the cards for the coming year.
There were more new arrivals in October, along with returning New Zealand citizens. However, the increase looked like normal month-to-month volatility.
Of more interest was what was happening to departures, he said.
Departures of New Zealanders had levelled off. Departures of non-New Zealand citizens had been steadily rising since mid-2016 and were now 30% higher than at this time last year. The group included people who would have arrived in recent years on temporary work and student visas.
Typically, those who arrived on those programmes stayed for about three to four years.
''Given the surge in foreign arrivals began in 2013, we have been expecting to see a corresponding surge in departures. Importantly, this trend looks likely to continue for some time and will drive a substantial downturn in total net migration over the coming year.
''Combined with likely changes in Government policy, we expect the above trends will see annual net migration drop from about 70,000 now to 10,000 in 2021.''
Mostly, the change was due to natural forces that drove net migration, like the strength of the global economy, rather than policy, Mr Ranchhod said.
The slowdown in net migration would have several significant impacts on the economy. Most notably, it would result in population growth slowing from 2.1% at present to 0.8% - a huge reduction in the rate of potential GDP growth and a key reason lower economic growth was expected, he said.
Andrew Whiteford, from Infometrics, said the new Government was seeking to reduce migration from its record-breaking highs. It also had a strong focus on regional development as many regions faced declining population.
''It faces a mighty challenge to reconcile these two policies which could work against each other.''
The provinces had enjoyed a population bonanza during the past few years from high international migration into New Zealand. There was a lot less talk about ''zombie towns'', he said.
In the year to June, when net migration rose above 70,000, only five of the 66 territorial authorities across New Zealand experienced population decline.
By comparison, in 2012, when international net migration was negative, 21 territorial authorities experienced a fall in population.
Migrants to New Zealand chose to settle in the major centres but as net migration had ramped up an increasing number settled in the regions, Mr Whiteford said.
They were attracted by lower house prices, less congestion and country living.
Strong population growth had helped the regional economies keep pace with the combined economies of the major centres.
While seeking to bring down international migration, the new Government also had a strong focus on regional development. A focus on the regions was crucial, as up to two-thirds of districts faced declining or stagnating populations during the next 30 years, he said.
Districts with declining populations would struggle to fund the maintenance of their ageing infrastructure.
The Government's $1 billion annual regional development fund would be spent on regional rail, planting trees, investigating the feasibility of moving Port of Auckland and other large-scale capital projects.
Those big projects should provide a stimulus to the regions, Mr Whiteford said.
''Reducing migration can potentially cut off a supply of much-needed population growth and economic stimulus to the provinces. It is going to be a difficult path for the Government to balance a slowdown of migrants and achieve the regional growth to which they aspire.''
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Districts with declining populations would struggle to fund the maintenance of their ageing infrastructure true but district with substantially increasing populations seem to find it even harder to maintain and advance their infrastructure so taxpayer input is called upon which is a double whammy take from the regional population. Money that would likely have been spent in the regions is exported to the cities.