Hedonic Price Model is based on the basic assumption that goods emerge thanks to coming together of different features. Therefore in this model goods are evaluated as a bundle of characteristics. The main aim with this model is to determine the implicit prices of each feautres belong to a good. The theoretical sub-structure of the model is based on the conditions of Perfect Competition Market. The product that is analyzed in the Perfect Competition Market is, as it is known, a homogeneous product. However, HPM is mostly used to analyze the price formation of durable goods. These kind of goods are the differentiated products that come from the combination of many properties. In the case of differentiated products, taking into account the idea that HPM can not define the entire market with a single equation, the existence of submarkets and the discussion of how these submarkets are to be determined has taken place in the literature. In the case of housing sector, two approaches have been adopted regarding how to identify submarkets. These are approaches called “spatial segmentation” and “similarity of house attributes”. 

This study analyzes the factors affecting housing prices in Isparta province, which is considered to be high in price level, and reveals potential submarkets with HPM. In this study data of 266 houses for sale/sold in the city center of Isparta were gathered by interviewing face-to-face with real estate agents and 22 properties were determined by multiple regression analsis which affect the house prices in Isparta the most. Besides Latent Class analysis revealed that there are five submarkets in Isparta. The most important finding of the study is that housing market in Isparta province can not be segmented based on spatial features.