Sounds like you have a good plan, call an experienced, recommended, reliable contractor. Maybe he/she can help you with an interior room divider, for the front door direct to lounge problem too. Here are some ideas https://www.houzz.com/products/room-divider-prbr0lbl-pl~l_38829

Now it's beginning to work! Luv the rug! A few more red showstoppers, and I luv the post about matting your family pic, and larger frame for it. Looks like you might be a bit uncomfortable with the great post idea of moving your sofa out into the room away from wall. If so, could you accept putting it diagonally from the entrance doorway, across that corner where it is, stopping at the edge of your window? That's a bit of a move outward, still can see the fp and tv, and show off your new rug, which could go diagonally in front of the sofa. Then, if you like that, after a while you could move it on out as Deb K suggests. Sometimes intermediate steps are more doable for us than those big changes.Same with painting; if you could first paint just the fp wall, then later paint other walls...seems some color would really make it more homey. Would you cosider a quite contemporary fixture for the light in the center ceiling? Maybe a bit of red could go there!

Thanks for the replies! My wife suggested we talk to a local real estate agent, so i think that is a good idea... just that Im not sure how helpful they are likely to be if we arent selling yet :) As for saving for our dream house, I dont disagree, however if doing this up nicely over the next ~5 years or so while we live here nets us some extra in the eventual sale, then that of course will help us as well. Interesting thing happened today actually. I got a knock on the door and one of the older neighbours asked if he could take some lemons from the tree. I of course said yes. Anyway he was telling me he had lived in the street for 40 years. I asked him if the house had always looked like this, and he said no that ~30 years ago the old old owner did a massive renovation and pulled off the timber and put up the bricks and gutted the inside of the house. Interesting stuff!

With any post war house built in the 50's the connection from in to out is non existent. Depending on where living rooms are located i would take some of the fantastic windows out and replace them with French doors, or bi folding doors and connect the house to the site. The colour scheme from Karen is perfect to lift the kerb appeal and give it a modern twist. With land costing more than houses these days and the fact that you seem to have quite a big block, after looking at paint colours, opening up the living dining kitchen areas to the outside with a roofed area. Even combining a flat roofed carport which will widen the house to the street making it seem a bigger house, can carry the new look with say an enclosed section for garden equipment, to the opposite side to the house, and if you are lucky enough to have that near the living area it can be used as both car cover and outdoor living. I always think a good landscape architect is worth their weight in gold, to give you a landscape plan, to suit the soil type, your skills level and your preference in planting. Divide up the exterior space to provide outdoor rooms under a tree, paths that lead to some special spot for kids, maybe even a veggie patch with a chock run, and make sure that you use the entire yard, front and back by enclosing part of the front yard in fencing which suits the style of the house, while providing some planting to the street. If allowed a gate structure to blend in with the house, a dedicated pathway with planting each side to the front door, fantastic fencing and consider natural materials like a hand laid stone fence with timber or powder-coated aluminium inserts, to give this house an entry, not sure where the front door is now, so that is not a good look. Gardens always enhance a house, they are never a wasted effort, and if you are not gardeners, make sure the landscape architect knows that and he will be able to select low maintenance plants. All the paint in the world will not give the desired effort that the garden will do to that paint work.