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Home Theatre help

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I need to buy a home theatre system and currently have nothing, I've gotten the hint the standard packages you buy in noel leeming etc are rubbish and would rather look at building a system starting with AVR and a couple of fronts then build from there.

To me the Yamaha RXV381 looks pretty good as a entry level start and appears to have all the features I require. Issue is I don't know where to start with the speakers, I was thinking maybe the Wharfedale Diamond 230s. Any advice would be appreciated, budget for 2 front speakers would be $700 max. Living room area isn't that large maybe 4.5mx4m + kitchen area. So I don't want spend money on speakers that are overkill for the size of the room.

Thanks

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