I'd consider putting the corner sofa and TV stand in the dining room, moving the stand-alone chair and footstool and tall lamp near the stove as a "reading nook" and placing the dining table in the living room, leaving enough for a walkway from the entry to the current dining / possible living room. In terms of the actual furniture, everything other than the colour of the dining chair fabric looks pretty good. I would start by decluttering and removing anything that isn't functional or which you don't find aesthetically pleasing. I'd personally remove the mirror in the bar as I don't think it gels very well, the tiny framed art near the stove, the art on the wall near the TV as it's too small and hung too closely and the drum kit (unless the drum kit is used on a daily basis). I really like the Marimekko print and, IF you like it, then I would use it as inspiration for adding colour to each of the rooms, possibly even a "feature" wall using the bright blue from the print (although I'm not a huge fan of feature walls). A few minor changes may also help, like replacing the blown bulb in the wall sconce, storing the ironing board somewhere else and taking down the "hanging" glasses in the bar area as they're visual clutter right at eye line height.

So many good ideas on lights. I have someone on the hunt for nice fittings here. Locals love chandeliers (cheap ones, not necessarily nice) and over-wrought creations that just aren't me nor would they suit the house. I love some of the suggestions here. In a win I actually found someone who has some imported carpets. A very small range of mostly plain colours but hopefully I can find something big enough to fit under the couches and keep our feet warm. We were also thrilled to find a single furniture shop with some reasonably modern furniture. They have this round table and chairs in a 6-seater combo, in stock. With the chairs pulled out, like in the picture we would have clearance of about 50cm behind each chair. Our dining room is 3.75m x 3.9m an there's a photo of the dining space in the very first post. Thoughts on this shape versus the traditional shape we currently have? Alternatively they also have this lovely traditional long table which we also liked, which made me think we could just get the existing picnic table re-finished and then perhaps buy these chairs to go with it. So that's our Christmas break blown, as we will be driving all over town (nothing closes here) looking for house stuff!

Are you here. Right now. Can you hear my conversation. Seriously, my husband said this exact sentence one second before your comment popped up. Lol.

What is your actual problem? Is it furniture placement? you are using the rooms in the best way for your family. Furniture can be placed anywhere in the lounge room. As all the above posted plans show, there is plenty of room for desks and tv and fireplace and office furniture. Ignore the externals windows and the small openings in your brick wall. Place the furniture “in” the room, not against the walls or windows. And floor coverings can be changed or floor mats used. Or introduce rules about not eating or drinking on the carpet. There is nothing wrong with the sunken lounge room. I would be just painting or covering with gyprock, all that exposed brick. If the carpet is such a problem for little people, then add hybrid flooring. Open plan is not always the best solution. The only wall I would be removing is that low, non bearing, dining wall. Covering all that exposed brick will make it feel open visually. At the moment the bricks are a physical barrier and a visual barrier. The walls are so busy, you can’t see anything else….