All walls are coming down between 2 & 3 and ceiling will be flush.

If you look at the square metres of the current kitchen, which is 11.1sqm, and the current space of bedroom 3 which is 9.71sqm they are a little different. But if you start your kitchen space from the hallway, as shown by red line, you will have about the same area. AND such a difference in feel and visually because the kitchen will then be open to the garden. Bedroom 2 is a great size for a 8 seater dining table. Go for it.

You may have to compromise on the depth of your island if you want seating. You could put the sink on the outside wall side of kitchen, as per your posted plan, and have a 600mm deep island. 300mm deep cabinets and 300mm seating space.

Example

After a quick look I wonder why you aren't using the lounge/living room for the kitchen Dining. This room already open to the garden, has easy access to the garage tec. Instead of losing 2 bedrooms.

You could look at using bedroom 2 as living/Media.

Which way is North

And there's already water and drainage in that room

Looks amazing, and we have thought of this. However the current living room is on a concrete slab and so much trickier to get the plumbing and drainage in. It’s also a much darker room and works really well as a cozy living room with a fireplace (which would have to be moved for a kitchen). I might investigate again anyway.

I had a play around with the IKEA Kitchen planner and this is what I came up with. Just a bit worried it might feel cramped. The tall cabinets on the right hand side don’t necessarily have to be there, was just thinking extra narrow storage might be handy, though might enclose the space.

Without the side cabinets, opens up the space a fair bit….

Shallow wall cabinets would be handy, if you need them for storage, maybe look at locating these cabinets where you have the buffet in the dining room. Still have shallow cabinets, maybe incorporate a buffet and storage along that wall. Either with solid or glass doors. Keeping them shallow so you have plenty of room for dining.

Showing on your plan the extending of kitchen cabinets into shallow cabinets or buffet with overhead cabinets.

A previous kitchen/diner of mine was only 6.1m by 5.1 m

On the advice of the designer we skipped bar stools at the island because the dining table was so close. And in all honesty there wouldn't have been room for them.

The dining room was functional, with an 8 seater table (2m long, 90cm wide) but you couldn't walk between the island and the table when people were seated.

how will you access the backyard from the proposed new dining area?

Sliding doors out to the back area.

The other option is to create a massive kitchen ONLY in the back two bedrooms and keep the dining room at the front of the house as it is now. It might be a bit disjointed, but we could potentially switch the dining room with bed 4 further down the track,

is there a deck outside bed 2 with steps down connecting to the alfresco at teh lower level alfresco ...i suggest that the existing sliding doors with alfresco will save far more than the cost of the new plumbing for a kitchen at the lower level...the actual cabinets will cost the same regardless of where they are located but a large empty room without any restrictions will mean that the cabinets will be less restricted in the lower room but, i'm also wondering if there will be renovations to the rest of the house as it's much better to plan the whole house renovation at the same time even if the work is completed in stages eg the original kitchen and central area could make a cosy media space

Yep, there used to be a sliding door outside the existing bed 2, so there is paving outside already and a step down.

Maybe I’ll get a quote for both options.

Been playing around tonight and come up with totally different layout which doesn’t feel so squished as chairs aren’t back to back. Storage cabinets along the back of the island bench wouldn’t necessarily need to be there. Thoughts?!

Flip it so kitchen is on outside side wall so people aren’t walking through the cooking zone

I can’t as that’s the only place the door can be and the table would be in the way, I think.

although your new idea may fit the space it would be disappointing not to have a view out to the pool from the kitchen and dining area and this is a comparison for two other options and i still prefer the lower room for the new kitchen

As I previously suggested, I would use the large room for the new kitchen dining family and take only the end bedroom for a sitting room connected to the family. As before the large room already has plumbing, this also gives easy access from the garage with any shopping. if it's dark you can always add a skylight.

the front room becomes a Media Lounge with bi fold doors, a Mudroom laundry next to the stairs and make the WC in the laundry a separate WC

We’re mid renovation and went with something fairly different in the end. Span the design and are able to squeeze in a dining table fairly comfortably.

Excuse the boxes!