Pep Guardiola admitted that Manchester City cannot be competitive if they continue to concede late goals as they did when surrendering an 86th-minute lead in Tuesday’s 3-2 home defeat against Real Madrid in the Champions League playoff first leg.

City held the advantage at the Etihad Stadium through Erling ­Haaland’s 80th-minute penalty, with the striker’s 19th-minute opener having been cancelled out by Kylian Mbappé on the hour. Yet Guardiola’s side collapsed as the final whistle approached.

Related: Real Madrid’s Bellingham settles thriller to leave Manchester City on ropes

Brahim Díaz’s finish four minutes from the end of normal time drew Real level, before Jude Bellingham’s winner in the 92nd minute. It means City have conceded eight goals in the closing 16 minutes of their last five Champions League matches. City, who host Newcastle in the Premier League on Saturday, now need to win by a single goal at the Bernabéu in next Wednesday’s return leg to force extra time.

Guardiola was asked if his side would struggle to be competitive for the rest of the season unless they arrest the flow of late goals. “Of course not,” the Catalan said. “I’ve been here for many years and we’ve been an extraordinary team, a machine every three days. This year, I accept when the opponent is better. But at the moment I’m not good enough to give composure to the team to manage these situations. It’s the truth.”

Guardiola denied City are stuck in a vicious circle that is perpetuating the problem. “When you are 2-1 up, psychologically you are scaring the opponent and continue to attack and after I could understand, but in 2-1 nothing wrong happened,” he said. “Then, we were closer to creating chances than them.

“After: what happened happened. It’s happened many times this season [giving up a lead]. I know the quality of Real Madrid. They started really well, first 10 minutes, and then we took the game. In the second half we gave away what we had.

“Its just bad decisions, that’s all. Everyone has to take accountability – I take it. It’s not about you and me, it’s everyone. It’s tough, but we will recover. We have Newcastle and then we go to the Bernabéu. We know what we have to do. We’ll go there to score goals.”

The defender John Stones said: “I don’t know how to put it into words straight away, it’s so raw and frustrating for everyone. We were in the game until so late and then it’s two situations that happen and we concede. It’s frustrating as a defender to come away with that result. It’s a feeling of anger and frustration.”

During the game City fans unfurled a huge banner that featured Rodri and the Oasis lyrics: “Stop crying your heart out”. This was to taunt Vinícius Júnior after Real Madrid boycotted October’s Ballon d’Or ceremony due to Rodri winning the honour not the Brazilian.

Vinícius Júnior created Díaz’s and Bellingham’s strikes and stated the banner inspired him. “I saw it – I saw the banner, but whenever the opposing fans do things like that they give me more strength to have a great game and here I have done it,” said the forward. “They know our history, everything we do in this competition. It is the fifth time we come here, it is always very cold, but this time we have won and we have to continue this.”

Jack Grealish and Manuel Akanji are injury concerns for City after being forced off.