When you don't have children, space is less important. We renovated our place (because we liked the position) for a few reasons:
- The original kitchen and bathroom were tiny
- there was only one bathroom (we now have an ensuite)
- the actual living space (i.e. not bedrooms/bathrooms/kitchen) was tiny
We now have a spare bedroom (with our two boys sharing a room) which doubles as a 'toy' room/library, have two separate living spaces (we added a 10m x 4.3m room on the back of the house which incorporates the kitchen and this is down a set of 4 stairs from the original house, but is open to the upstairs living space).
This means there is more than enough space for our two boys to have friends over without feeling cramped on a rainy day. We still have a sizeable backyard (block is 800sqm), so there is still space to run around and also to grow vegies. This is almost as important as the inside space.
I'm sure we could live in something smaller, but won't even contemplate it until the boys are bigger.