The Australian actress, who is best known for her roles in The United States of Tara and Muriel's Wedding, reportedly spent $6 million (£3.8 million) on the double-fronted, five-bedroom Victorian terrace in Paddington.
According to The Daily Telegraph, Collette and husband Dave Galafassi originally intended to renovate the Bronte house that they bought two years ago for $4.4 million (£2.8 million), but building quotes have blown out by millions of dollars.
The property was listed by estate agents as a "palatial", contemporary family home, "stunningly reinvented to embrace light". It is reported to have an open-plan living space, rooftop terrace, high ceilings, a courtyard and a marble kitchen.
Collette and Galafassi returned to Australia from the US last week for her to start filming new movie Mental. They are expected to move into their new home early next year.
The couple are parents to daughter Sage and welcomed son Arlo earlier this year.