Goals from Raheem Sterling, David Silva and Ilkay Gundogan eased the Premier League champions to victory against Villa, moving them to within three points of leaders Liverpool who have a game in hand.
City triumphed comfortably despite losing Fernandinho to a red card in the 87th minute, with Villa offering little resistance as they sought to kick-start their season following promotion from the Championship.
But youngster Grealish starred for the visitors despite their heavy loss, leading the City manager to lavish praise on the 24-year-old for his influence over the game.
“He [Grealish] is an incredible, incredible player - top player," said Guardiola. "I am happy for the fact he is an Aston Villa player and he got offers to move on but decided to stay there in the Championship.
“I like that they were promoted to the Premier League and he defended his club. He is a talented player - fast in the final third, passes, always creates something.
“He's an exceptional player but too expensive for Manchester City!”
Sterling, fresh from a Champions League hat-trick against Atalanta in midweek , led the way again for City.
Guardiola is delighted to see the England international ignoring the hype which continues to build around him, with the 24-year-old forward proving to be a model of consistency and professionalism.
The win against Atalanta left City with three wins from three in Champions League and with one foot in the last 16, but it’s in the Premier League that they have their work most cut out for them to retain the crown they've won for the past two seasons
Guardiola hasn't held back in criticising his side this campaign and once again took aim at their first-half performance on Saturday.
“We played a good 45 minutes, not the other ones. Respect and credit to Aston Villa," Guardiola said. “The first half we play football but not in the way we should play.
“The second half we were better, an early goal in the second half helped us and we played in the way we normally are but we have to try to play 90 minutes and not just 45.”