The former Manchester United player lauded the quality of Roberto Mancini's squad but highlighted a ‘cockiness’ in the team that he believes may cost them dear in the end.
“With the team City have, they should be walking the title now – especially given they were five points ahead at one stage,” said McGrath.
“There’s a cockiness that comes in, but as Sir Alex Ferguson knows, you’ve got to fight right until the finish line is crossed.”
McGrath also explained that City are struggling with the pressure a title run-in provides.
“There is an enormous pressure on them though, and in average games that they’d probably win nine times out of 10, they’re suddenly at this time of the season so wound up knowing they can’t lose a game that they’re afraid to play," he said.
"This means some players don’t want the ball and they end up with draws instead of wins.”
As for United, the former Republic of Ireland international admitted that the squad is weaker and less experienced than those in previous seasons, despite some fantastic victories.
“They have had some great results, that great Arsenal win for example,” he said.
“But I don’t think United are half the team they were, honestly.
“Player-wise, they’ve had teams in the past with magnificent players all over the park, now they’ve got kids they’re training up and obviously a few will go on to be great, but they’ve thrown a few of them in a bit early.
“That’s what makes Alex Ferguson so good coming into a title race. He could write the book on it.”