Paranormal Activity is terrifying and not just jump-out-of-your-seat-screaming scary - this one will have you seriously considering rearranging your life so that you can sleep only during daylight hours.

A couple of young yuppies, Micah and Katie, are experiencing some strange goings-on in their suburban San Diego home. Micah buys a camera and sets it up in their bedroom each night. He becomes such a camera nut (the latest in clichés, for this new wave of faux reality movies) that he also documents much of the rest of their lives within the house. In the style of The Blair Witch Project, we are presented with the found footage, provided by the local police department for our entertainment.

What we see unfold is otherworldly, but it is not the paranormal that makes this film deeply horrifying. Micah and Katie have been together three years, enjoying the first months of sharing a home when Katie reveals that a reoccurring strangeness she's experienced since childhood has returned. What happens between this couple, as the goings-on become more and more difficult to laugh off, implants a thought far more chilling than any evil spirit. The implication is that you can't trust anyone, especially not those you love. It's not a matter of bad judgment, more that if things take a turn for the worse, you're going to find it difficult to jump ship.

Their relationship is utterly convincing - Micah is protective, Katie is stubborn and they bicker over how to manage the situation. A psychic tells them the malicious force will feed off of any negative energy in the house. Despite mounting evidence that Katie has brought some serious baggage into the relationship, Micah is determined to solve the problem. Of everything we see, and don't see, the scene in which the couple go through their nighttime routine of removing the decorative cushions and quilt from their bed resonates. It's the domestic, rather than the demonic, that will creep out adults for days after. This note lends a clever bit of viscera to the stream of shocks. Horror movies have long made you fear the ordinary, but this one will stop you from being able to forget about it over a glass of wine.

The film was shot in director Oren Peli's house with two of his friends over a week. It cost just $15,000. Critics are enthused by the lack of on-screen violence or showy special effects. They're right, Peli has done an awful lot with very little. A one-line story, two people and a handheld camera. In an interview the director said, "Micah believes he can outsmart it. You think you have access to all this technology, you can do anything. But it doesn't matter. In the end, this ancient, primal thing is stronger." The same could be said of Peli, as his DIY filmmaking trumps big-budget fare.

Paranormal Activity, however, does fall prey to some of the usual horror tropes. Some ideas are not followed through to their natural conclusion, leaving loopholes of plausibility that allow an audience to argue over how they would have acted differently. The couple is too confined - they seem to have no friends and only one relative - and even though it's not the house, but Katie that is haunted, they never leave to explore how the spirits might behave at the local supermarket. They also are disinclined to put much effort into soliciting paranormal-fighting support. But the movie's improvised and inherently terrifying nature paints over most of these cracks.

All in all, if you do see Paranormal Activity, perhaps be prepared to wish you hadn't. It is going to take some heavy repeat watching of Mamma Mia to forget.

Paranormal Activity ★★★★✩

Directed by Oren Peli. Written by Oren Peli. Starring Katie Featherston, Micah Sloat, Mark Fredrichs