The population density is probably one factor. New Zealand has 5.34 million people in 103,000 square miles. At the other extreme you have Hong Kong with 7.5 million people in 430 square miles. Each mile of track gives service to a much larger percentage of the population in Hong Kong than New Zealand. The same goes for a lot of the United States. The coastal corridors in the United States are population dense, but the interior less so.

Population density is one thing. Another issue is timing.

New Zealand was a really young country when railway technology came along, and didn't really have enough time or money to invest in a good railway network before other technology came along.

Airplanes are the perfect technology for NZ's geography, because they just fly over everything. There are actually a few places in NZ that received passenger airline service in the 30s before they received a railway connection (namely Gisborne), and many other places that never received railway connections.

At the same time, NZ was one of the fastest adopters of the automobiles, second only to America.

I think viable cars and airplanes had taken another 25 years to arrive, NZ might have had a much more complete railway network, with a much better chance of surviving intact into the modern era.

Population density is not accidental. HK has towers and greenery vs Anglophone culture which is to build homes sprawled into the greenery.