Relatives or not, these are two different people now and as turns out, the Jews and the Palestinian see exactly the same piece of land as their one and only national homeland. This is the main problem. There are also some secondary issues, like certain religious directives, which add fuel to the fire.
It is a good question. Maybe it’s because their political leaders strongly encourage them against compromising, or because of “support” from other Arab countries who are very enthusiastic at fighting Israel “till the last Palestinian”, or maybe it is because of the influence of some other political groups and forces, which find continuation of the conflict more useful than its resolution.
Hell, maybe it is just human nature. It seems like everybody hates war, and yet wars happen all the time. Go figure.