A virtuoso performance with the ball from Josh Hazlewood has put Australia into a dominant position after the first day of the second Test match at Hagley Oval.

The New South Wales quick took 5-31 to help bowl New Zealand out for just 162 in 45.2 overs in front of a disappointed capacity crowd of 8,000 in Christchurch.

In response, New Zealand bowled well but to reduce Australia to 4-124, but the tourists trail by just 38 runs with Marnus Labuschagne unbeaten on 45 and nightwatchman Lyon on 1 overnight.

Having won the toss and chosen to send New Zealand in, Pat Cummins and Australia may have been disappointed at failing to take a wicket in the first hour of play.

But the Black Caps' woes began when Will Young (14)  was brilliantly caught by Mitch Marsh at third slip off the bowling of Starc, whose leg-side delivery took the leading edge of the bat.

Tom Latham (38) fell not long after, becoming the first of Hazlewood's victims and the first of Alex Carey's five catches. He was soon followed by Rachin Ravindra (4), whose loose shot in the last over before lunch officially turned the first session in Australia's favour.

Not long after lunch, Daryl Mitchell (4) was added to the caught Carey, bowled Hazlewood list, before Australia claimed the big scalp of the innings in Kane Williamson.

In his 100th Test, Williamson (17) was stuck on the crease and beaten by a Hazlewood delivery that was full and jagged back into him. Williamson was given out immediately and reviewed out of obligation, but cut a disappointed figure as he trudged back to the pavilion.

Starc got back into the act with two wickets in two balls, the first a fortuitous glove from Glenn Phillips (2) down the leg side and the second a searing yorker that struck Scott Kuggeleijn's foot dead in front for a golden duck.

The wicket of Phillips was Starc's 356th Test scalp, moving him above legendary West Australian quick Dennis Lillee for fourth all time in Australia's Test history.

Cameron Green removed Tom Blundell (22) with another short one that flicked a glove down the leg side through to Carey, leaving only bowlers left for New Zealand.

But Tim Southee (26) and Matt Henry (29) rallied, putting on 55 for the best partnership of the match.

Southee would eventually hole out to fine leg going the slog, before Henry handed Hazlewood his fifth wicket with a feather the next over, but those were invaluable runs for New Zealand and pulled it away from total embarrassment.

"Obviously it wasn't ideal with the bat," Henry said at stumps.

"But we knew how to operate out there and put Australia under pressure."

Steve Smith (11) and Usman Khawaja (16) found the going tough against New Zealand's opening bowlers Southee and Henry, but it was debutant Ben Sears who made the breakthrough.

The 26-year-old debutant saw his first ball dispatched to the boundary for four, but his third delivery cannoned into Smith's pads without the erstwhile opener playing a shot. 

Umpire Menon was quick to raise the finger and he was shown to be correct, the ball shown to be clipping off stump after Smith reviewed.