The prolific Kane Williamson produced another defiant innings, but New Zealand lost two wickets in reply to Australia's huge first-innings total on day two of the second Test at the WACA.
David Warner added just nine runs to his overnight total before he was dismissed for a magnificent career-best 253 as Australia declared on 559-9 in Perth on Saturday.
Warner had put on a show by making the highest score on the first day of a Test in Australia, but Trent Boult (2-123) finally ended the opener's brilliant 286-ball knock - which included two sixes and 24 fours.
Mitchell Starc (1-17) and Nathan Lyon (1-24) dismissed Martin Guptill (1) and Tom Latham (36) respectively, but the classy Williamson (70 not out) and Ross Taylor (26no) saw the tourists through to 140-2 at stumps.
New Zealand will need Williamson to go on and make another big score as they still trail Australia, who have concerns over a hamstring injury sustained by Usman Khawaja, by 419 runs and face a battle to avoid suffering a series defeat in Perth.
Australia resumed on 416-2 following the heroics of Warner and centurion Khawaja, but New Zealand bowled fuller lengths and tighter lines, ensuring runs were harder to come by at the start of day two.
Warner's incredible knock ended when he edged Boult to Mark Craig at third slip in the sixth over of the day and captain Steve Smith (27) was caught behind attempting to slog Matt Henry (2-105).
Adam Voges (41) and Mitchell Marsh (34) put on 50 for the fifth wicket before the former was caught behind off a far more impressive Boult as Australia played their shots with plenty of runs on the board.
Marsh struck five fours and a six before he fell to a fine catch from Doug Bracewell off his own bowling and Craig (3-123) claimed three wickets in an over before Smith declared.
The tourists suffered an early blow when Starc trapped Guptill leg before with a full, straight delivery that swung back in and Joe Burns was unable to take a difficult chance to get rid of Williamson early on.
Australia wasted a review when they thought Williamson had nicked Mitchell Johnson behind and New Zealand's premier batsman showed why the hosts were so keen to see the back of him.
Williamson drove elegantly through the covers as he struck 10 boundaries, but Lyon had Latham caught at slip before Taylor and Williamson dug in with an unbroken stand of 53.