How do you turn 15,000 dollars into $100m? If you’re Israeli-born film-maker Oren Peli, you write and direct a low-budget supernatural horror movie, shoot it at your own house in your spare time and watch as that modest vision becomes a 21st-century Blair Witch Project.

Paranormal Activity is a phenomenon, scaring the bejeezus out of audiences with its deceptively simple narrative and grainy camerawork, captured by characters as they hunt for an evil spirit in their home.Various cuts have been screened, but the version set to terrorise British cinemagoers is a genuinely creepy encounter with things that go bump in the night.

The writer-director cranks up the suspense until we’re almost holding our breath, anticipating the next episode of ghostly interference. Unlike the recent glut of torture porn thrillers, Peli’s film exercises restraint to the heart-stopping finale. Micah (Micah Sloat) lives in San Diego with his girlfriend Katie (Katie Featherston), who senses a spirit watching over her. Reluctantly, Katie agrees to let Micah capture evidence of the haunting on his new video camera by setting up a tripod in the bedroom to record everything that happens as they sleep. Footage of a door opening and closing of its own accord is the first sign that something is terribly wrong.

Micah doesn’t take his role seriously, brazenly goading the spirit (“Is that all you got?”), while Katie desperately tries to prevent him making a bad situation worse.

As the visitations become more intense, Micah invites a psychic (Mark Fredrichs) through the front door. The visitor leaves quick-smart, sensing that evil has taken root in the house and will stop at nothing until it has consumed Katie.

Paranormal Activity almost lives up to the extraordinary hype from across the Atlantic, effectively tapping into universal fears. Featherston and Sloat are compelling, the latter grating on our nerves as much as Katie’s as he foolishly introduces a Ouija board to the house. Physical manifestations of the malevolent spirit start with a light turning on in the middle of the night, or a shadow moving across the bedroom door. As the film moves into the shocking final act, Peli pulls out all of the stops to have us biting our nails down to the cuticle.

Christmas comes early courtesy of British director Debbie Isitt and Nativity!, her improvised comedy about the preparations for a primary school nativity play. Shot without a script as a safety net, the film is a feel-absolutely-wonderful treat steeped in festive cheer that delivers tidings of comfort and boundless joy for the entire family. The central character’s redemption echoes George Bailey in the classic It’s A Wonderful Life and a supporting cast of inexperienced child actors is irresistibly cute and cheeky without ever being precocious.

Martin Freeman essays another beleaguered loser in love, who tells one little white lie that rapidly snowballs into an avalanche of misunderstandings.

He plays the straight man to Marc Wootton’s demented sidekick, a whooping force of nature.

Pint-sized co-stars can barely keep a straight face as he bounds through each scene like an excitable puppy.

By the time the curtain rises, we’re hopelessly smitten with all of the players and will them on to a standing ovation.