The rise of the “third room”: How Australians are reinventing their outdoor spaces

There was a time when the backyard was an afterthought. A patch of grass, a rusting barbecue, maybe a plastic chair or two.

For decades, Australian homes directed all their energy – and renovation budgets – inward. Kitchens got marble benchtops. Living rooms got feature walls. The outdoor space waited patiently, largely ignored.

That era is over.

In the years since COVID-19 reshaped daily life, Australians have undergone a quiet but dramatic rethink of how they use their homes. Outdoor areas – patios, decks, pergolas, courtyards – are no longer considered an extension of the house. They are the house. Designers, real estate agents, and homeowners alike are now calling it the "third room": a fully functional living space that sits between the indoors and the outside world.

The investment is real. Spending on outdoor furniture, landscaping, shade structures, and weatherproofing products has surged since 2020 and has shown no signs of slowing. Sales of waterproof outdoor patio furniture covers, all-weather rugs, and UV-resistant fabrics have all climbed sharply as homeowners signal a clear intention: these spaces aren't seasonal luxuries anymore. They're permanent rooms, expected to perform through rain, heat, and the kind of weather unpredictability that comes with an Australian climate.

So what's driving it – and what does the modern Australian outdoor space actually look like?

Lockdowns changed everything

The catalyst, of course, was the pandemic. When Australians were confined to their properties for extended periods, outdoor space transformed from a nice-to-have into a psychological necessity. Backyards became gyms, offices, classrooms, restaurants, and entertainment venues all at once.

But the more interesting shift wasn't just how people used their outdoor spaces during lockdown – it was how they felt about them afterward. Survey after survey in the 2021-2023 period showed that Australians had developed a fundamentally different relationship with their homes. Proximity to green space ranked among the top priorities for renters and buyers alike. Outdoor entertaining areas were consistently listed as one of the most valued property features – sometimes above an extra bedroom.

That psychological rewiring didn't fade when restrictions lifted. If anything, it deepened.

From furniture to full fitouts

Walk through any Bunnings, browse any outdoor furniture showroom, or scroll through Australian design accounts on Instagram, and the ambition is immediately obvious. The modern outdoor space isn't a setting for a weekend barbecue – it's a considered, curated environment.

Outdoor kitchens have exploded in popularity. Once the preserve of architecturally designed homes in expensive suburbs, they are now a mainstream aspiration. Built-in stone benchtops, stainless steel cabinetry, pizza ovens, sink-and-tap setups –

features that belonged exclusively to indoor kitchens a decade ago have migrated outside. The same is true of entertainment infrastructure: outdoor televisions, weather-rated speaker systems, and smart lighting rigs are increasingly common in suburban backyards across every major Australian city.

Furniture itself has undergone a parallel transformation. The flimsy folding table has given way to modular lounge suites, daybeds, fire pits, and dining settings built to the same standard as indoor pieces. Materials have evolved accordingly – teak, powder-coated aluminium, and all-weather wicker now dominate a market that once defaulted to plastic and basic steel.

The weatherproofing economy

With increased investment comes an increased need to protect it.

One of the fastest-growing sub-categories in Australian home improvement retail is outdoor weatherproofing. Pergolas and shade sails have become standard rather than premium additions. Retractable awnings and café-style blinds – once found mainly in commercial settings – are now a common sight on residential patios. Decking sealants and UV-protective coatings have moved from tradie territory into DIY weekend projects.

This reflects a maturation in how Australians think about outdoor spaces. The mindset has shifted from "set it and leave it" to active maintenance and seasonal preparation. Homeowners are increasingly aware that protecting their outdoor investment year-round is what separates a space that endures from one that deteriorates.

The property value equation

Real estate agents across Australia will tell you the same thing: a well-designed outdoor area sells a house.

Domain and CoreLogic research has consistently found that functional outdoor entertaining areas rank among the top value-adding features for Australian properties. In competitive markets – particularly in Sydney, Melbourne, and Brisbane – a thoughtfully finished patio or deck can meaningfully move a sale price. In inner-city markets, where apartment buyers routinely sacrifice square footage for location, any private outdoor space commands a significant premium.

The calculus for homeowners has therefore shifted. Outdoor renovation is no longer viewed purely as lifestyle spending – it's increasingly framed as property investment. A $20,000 outdoor kitchen and pergola setup that elevates a home's appeal and liveability is measured against its likely return at sale, not simply its cost.

What comes next

Industry observers expect the outdoor living trend to continue evolving rather than retreating. Biophilic design – the intentional integration of natural elements like plants, water features, and natural materials into living spaces – is gaining mainstream traction, moving the conversation beyond furniture and structures toward the full sensory environment of an outdoor room.

Sustainability is also shaping the space. Native planting, permeable paving, composting systems, and solar-powered lighting are moving from niche interest to standard consideration in backyard design conversations.

The third room, it seems, is not a trend. It is a permanent feature of how Australians live – and how they expect to keep living, long after the world that prompted it has faded from memory.

Looking to upgrade your outdoor space? Browse our guides on alfresco design, outdoor furniture, and backyard renovation across Australia.