You need to work out the extents of allowable and desired building envelope for your block. This will help determine what can be done at ground level. Is there a level change somewhere?
Going up is more expensive usually and needs space for stairs. But if you have level issues it could be the best solution for you.
Start getting your house valued. Then look at houses of the size and quality you want to compare cost. Add stamp duty you would have to pay to purchase and you get an idea of your budget without overcapitalising

where is north, which sides of the property have neighbouring homes and where is your front entry....you said that there is a main road on the shed side but and where do the gates near the pool go to and what is the distance from the house to the sides, front and rear boundaries? a google earth view of the roof and some photos would also help and if you love the area then investing in upgrades should be cheaper than moving

Actual block boundaries with dimensions, where do you park cars, driveway, what is the shed used for. The carport appears to have an existing wall across the front are there any others, what is the garage door fitted to, Which way is north, what is the house built with and photos of roof, internal and external would help, How many live in the house. thanks

Thanks @Kate the block is all level. Yes, had house valued last month at $700k. 4 bed 2 bath in area generally going for $1m - $1.3, typically on smaller blocks. Thanks for the advice.

Thank you @siriuskey I have added a google earth pic. Pink line is boundary. The driveway is shared with next door house. Cars enter next to the rainbow. I park where red rectanges are (one driveway spot and one in carport). On-foot access is via 2 gates, marked by stars on picture. Carport has 3 walls (back - joins shed, side, joins next door's car port, roller door to front. No wall on side closest to house - walkway between here). 3 people live in house. Hopefully another child soon.

@oklouise thank you for your comment. North is where rainbow pic is on new Google Earth pic. neighbouring homes shown on that pic too - at each short end of house. Yes, main road on shed side. So front of house is accessed via driveway or car parking space (marked with stars in pic). Have marked parking spots as red rectangles.

We crossed over OKL, lottery ticket?

before suggesting any alterations we need to know the exact length and width of the block, the maximum sized house that can be built and how close you can build to all four boundaries as well as all the other questions that have already been asked...ask your local Council about these building regulations and they should also be able to provide a copy of the original plans ...no point in thinking about extensions until you know what's likely to be approved

Thanks so much @oklouise

Might make sense to do 2nd storey over living space. When u take that roof off you can realign walls for better layout on ground floor

Can you confirm that visitors also enter via the pool side of the house meaning that there is no parking on the Main Road/Freeway side.

The house is Brick and tile on a concrete slab which includes the walkway and carport on the same Slab? and do you have any idea of budget And how old is the house. TIA for answering these extra questions

Good questions siriuskey, I was thinking the same. Is the front door on the plans actually never used if driveway access to home is at the back in a shared driveway? How do the children access the main road “front” shed yard, is it through the front door?

Hi @siriuskey, correct, it's a strange set up. The homes were built as show homes, so the 'front door' faces the main road, but has no access to the street via foot/car. The 'back door' (nearer the shared driveway) therefore is accessed as most people would access a front door. No parking on the main road, no. The front door is only used to access the front yard (main road side). Yes, all one slab. No idea of budget - just starting the process. Trying to work out if worth renovating now/in future or just moving when we outgrow the phone. Built 1995.

Hi @dreamer - as above, the front door is really the back door, and vice versa. Houses built as show homes - so 'front' facade visible from main road. In reality it's like having a house built backwards on the block. We only use the 'back door' (sliding door into kitchen/family on floorplan) to enter the property. The shed is accessed via gate between carport and house, or via front door into front yard. And yes - kids just access the front yard via the front door.

@Kate thank you. Is there an obvious spot for stairs in your opinion? Many thanks.

Do you need the sliding door from the dining area, Can this be closed to just a window?

Your large shed goes to the boundary on the main road is this allowed, what is the set back, the house next door looks to be closer to the main road side?

@Kate noooo, that sliding door is the stupidest thing ever. High on the list of 'things that would never feature in a house if it hadn't been built as a show home' - alongside 'one plug socket per room is plenty'!

@siriuskey yes shed is very new and had all council permission. it's about half a metre to a metre back from the boundary onto main road. Just googled council set back from primary road, it's 3m...

@siriuskey yes next door (to south - charcoal roof, not red roof in pic) has master bedroom and ensuite closer to boundary than us.

Wow, thank you @oklouise - this is amazing! I love the idea of an ensuite that is accessible without traipsing through the bedroom. And your idea for kitchen layout is fabulous. Love it!