Ozbern: we had a similar dilemma, lovely backyard and then they started tearing down bungalows and building four story townhouses all around us. I built a single depth pergola along the back property line, the beauty of this is not only the privacy, but it brings the scale of the yard down to make it feel more intimate when we are outside. We also added a 10' x 10' (little over three meters) pergola right up against the house where we had a wall of windows. Will try to find that photo too. We have coral vine now growing in it. Dies in winter, comes back in spring. You can always do more contemporary details if this is too casual.

The blue is awesome (grey is too trendy)! The reason it stands out to you is perhaps because it's the only real colour there. Bring in the blue in a window treatment, a small appliance that sits on the counter, a pretty tray or area rug. Also, it is more appealing often if there are more than 2 colours - so right now you have a white and blue colour scheme - bring in red or orange or fushia - something from the other side of the spectrum (like you did with the yellow flowers but in a more permanent way)!

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!

I would wait for the rug, until you have the shutters up and your furniture placed..it may take on a character of its own and you'll want to compliment. My first thought though was to coordinate with your kitchen and incorporate some black, with a black/beige stripped rug, which would be fun with the wallpaper and perhaps paint your chairs black, add the shutters and you could paint the window trim black and add a large black chandelier.