@lolita01
Palm trees galore and lot's of wannabe mansion homes.
God forbid that a suburb has lots (not "lot's") of palm trees.

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@plpierce Apparently it's John Clarke's house.

They use the house's correct address by the third season. In the first series, the street was named 'White Horse Court' (seen when Kath gives details for her gift registry), then Lagoon Court, then Lagoon Place, which I believe is the actual street.

When I used to live in Australia (Ballarat) I was in Melbourne visiting a friend and they were filming a scene just around the corner. My friend lives in Moonie Ponds.

This is correct my uncle lives 2 streets away in this Melbourne suburb, I have driven past the house many times
I hope he's sober. We've still got jojoba left over from October Kath & Kim

yeah in the special features they say that they try to avoid showing the lake in the background because it makes the family look too wealthy, and it takes away from them being somewhere in the lower middle class.

You can see the lake in the first season.
"Look lady I don't come down to where you work and slap the d!ck out of your mouth".

I also read somewhere that the reason they never show beyond the back fence is because they have a man-made lake there.

according to the imdb site, a house in Patterson lakes was used as Kath's house. See the filming locations tab.