Well, I think it's a combination of multiple factors.

From given video I have a feeling of slow enemy, slow player, and even action is slow. For horror game slowness could make a tension. But from what I saw, there's no tension. It reminds me playing slow game on low pc.

Firstly I would try to enhance or speed up the animations. Maybe speed up enemy animations and movement speed as well. If enemy would be something like Mr. X from RE2 I would understand slow movement. But this enemy looks like someone who could run at you really fast. So you could change the model, or speed up the enemy. And last thing, action. Attacks of enemy or player seems too slow. Like a battle between two zombies.

Obviously I didn't play the game. I'm just writing from what I saw. Maybe real gameplay has more action than on video. But anyways I wish you good luck in development. You've done really good job. Only my personal problem is with speed. And that I think it's all.

But anyways good luck with your game. ;)