Proper kids shoes in NZ are ridiculously priced!
Over here they have a couple of really good chain stores with trained staff where you get your kids feet measured up for size and width, and they fit them properly. To get that kind of service in NZ you need to go to a specialist childrens shoe store and, like you said, pay $100+ for a pair of kids shoes that they grow out of in a couple of months!
Before we came here and I bought shoes in NZ for Charlotte I did my best with what was on offer.
I got a few really good pairs in Farmers and Hannahs- I would make sure the sole was flexible but supportive (If you grab it at the heel and toe it should bend about at the point where the ball of the foot sits).
When they try on the shoe make sure that there are no parts which are too tight- check the sides and along the top ridge of the foot especially. They shouldn't 'dig in' at all anywhere.
They shouldn't be too big (no more than a thumb width of growth at the toes) and make sure you get a new pair as soon as they are too small. Just have a quick check each time you put their shoes on to make sure they aren't too tight anywhere.
Properly fitted shoes shouldn't give them blisters. Neither of my girls have ever got blisters from shoes they have had properly fitted.
When they're small, try and have them in bare feet as much as possible- especially when they are around home.