This paper analyzes the factors that affect house pricing in Istanbul. As a large metropolitan area, Istanbul has many sub-markets with unique natural and historical settings surrounded by the sea. These amenities are reflected in its housing prices and create sharp differences between the different sub-markets. In the analysis, first, building and environmental characteristics are taken into consideration. Different hedonic price functions are estimated at the metropolitan level and for different housing markets depending on house size, age and price groups. At the metropolitan level, it is found that sub-district is the most important factor to affect housing prices. Second, the models are extended to incorporate spatial neighborhood dynamics and spatial variation with respect to the influence of housing attributes on housing prices is examined. The results of the study reflect the concept of the widely accepted hypothesis that housing price is determined by two types of characteristics: structural and locational. The results have important implications for the understanding of urban structure and urban dynamics; what makes the study interesting is the unique setting and timing of this process in an urban structure transforming from a mono-center into a multi-center city.