The area of the house we were going to put bedrooms is actually a carport on the plans, so we have decided to build an extension to house two bedrooms.
The extension needs to be less than 50% in size than the rest of the house, so that we don't trigger bush fire planning regulations. This would involve many thousands of dollars in compliance, and would mean bringing the rest of the house up to current standards. Cheaper and easier to build a small extension, although the compliance just for this has cost well over $10,000.
Its going on the end of the house beyond the laundry and bathroom. Access will be via the laundry which isn't ideal but we have limited options.
We also decided to put a decent footing in around the front of the house. We'll put a small retaining wall on that and then pave the whole area across the front. Cheaper than a deck and no fire regulation issues using timber