Glory's hopes of winning their maiden W-League title were brought to a crushing end on Sunday night (AEDT) when they fell to City in the decider at nib Stadium.
It followed on from the Glory's 3-1 grand final defeat at home to Canberra two years ago.
Despotovski said he was proud of his side after they overcame last season's eighth-placed finish to reach this year's decider.
While City's star-studded squad proved too hard to overcome in the grand final, Despotovski is adamant that the best is yet to come from his fledgling squad, saying they were not expecting to be in title contention for another two years.
"We must not forget where we're heading," Despotovski said.
"This grand final loss, somebody's going to say, 'It's going to derail us'. Nah.
"We weren't supposed to be out there for another two years. But we actually got there this year.
"They achieved everything because they worked hard and were willing to learn."
Despotovski is keen to return for his third season as coach, and said he wants to continue his master plan of turning the club into a powerhouse.
"When I took over, I always said between three to five years is a realistic plan to set this club up in stone to be solid, so that anybody can coach it," he said.
"As long as the club wants me, I'll be here."
Glory captain Sam Kerr remains the club's brightest talent.
But Despotovski praised the efforts of the entire squad, and said he wants to keep the core of the group together rather than splash out on interstate or international stars.
"This club is a WA-based club," Despotovski said.
"I can go and beg (owner) Tony Sage to give me a cheque and go and buy the whole 15 players.
"But is that fixing football in WA? It's not. We want WA-based players to be the backbone of this club."
City became the first club in W-League history to win back-to-back titles, and player-coach Jess Fishlock said the club's form struggles during the middle part of the season made Sunday's victory even sweeter.
But as for a three-peat next season?
"I have not even thought about that," Fishlock said with a laugh.