Australia declared their first innings at 559 for nine before tea on the second day of the second Test at the WACA Ground in Perth on Saturday.
Having reached 512 for four at one stage, the home side lost a string of cheap wickets searching for late runs, with Kiwi spinner Mark Craig (3-123) on a hat-trick at one stage.
New Zealand foiled David Warner’s bid to break more batting records when they removed him for 253 early in the day, caught in slips off the bowling of Trent Boult.
Australia, ahead 1-0 in the three-match series after a 208-run win at the Gabba in Brisbane, had resumed at 416 for two, with Warner on 244 and eyeing Matthew Hayden’s record WACA score of 380 against Zimbabwe in 2003.
However, he added just nine runs before some much-improved bowling from Boult saw him edge the ball to Craig.
It was the second-highest individual score at the WACA, behind only Hayden’s massive knock against one of cricket’s minnows.
Warner faced 286 balls and was at the crease for 409 minutes, hitting 24 boundaries and two sixes in an impressive stand that was the highest of his career and his first double-century at Test level.
Warner had helped Australia notch an opening day WACA record on Friday and posted the best Test haul by an Australian in a single day on home soil.
He also became the first batsman to score three Test centuries at the venue.
Australia captain Steve Smith made no such impact, making just 27 before he aimed a wild swing at Matt Henry (2-105) only to edge a catch to the wicketkeeper.